Public Procurement (British Goods and Services) Bill

Lloyd Russell-Moyle Excerpts

2nd reading
Friday 15th March 2024 Commons Chamber

[Sarah Champion]

The hon. Gentleman has had a premonition, as that is my next line. The hon. Member for Bosworth should indeed be commended for the “Buy British” button and we absolutely should roll it out across all websites, across all suppliers. Every supermarket and local shop should be proud to say that they stock produce that was made in Britain and made as locally as possible. That helps us on so many levels, particularly the environmental one. It also supports our workers, who are doing an amazing job in a very tough environment. I absolutely support the hon. Member for Darlington (Peter Gibson) and the hon. Member for Bosworth for the work that they have done and are doing on this.

[Lloyd Russell-Moyle (Brighton, Kemptown) (Lab/Co-op)]

As my hon. Friend rightly points out, people in schools and hospitals have no choice as to what provider they go to, because they are in an institution, as we are; the choice is made by the institution on their behalf. Where consumers do not have a choice, the reporting requirement under the Bill would apply pressure to ensure that the choice made on their behalf is the right one.

[Sarah Champion]

I absolutely agree with my hon. Friend. Nobody who procures with taxpayers’ money wants to do a bad job or waste money; the highest possible scrutiny is imposed. My Bill asks them to publish their decisions, in the hope that if Ministers follow up that data, they can see why decisions are made and how much of the procurement is from British suppliers. On his specific example, parents would love to know the trail of the food their children are eating. A recent poll by Deltapoll backs that up. It found that 81% of 4,000 people polled said that being able to buy British food was “very” or “fairly” important, while 94% of people said that support of farmers was “very” or “fairly” important. Despite overwhelming public and cross-party support for buying British, let us be honest that our farmers are struggling. The Office for National Statistics reported that over 6,000 agricultural businesses have closed since 2017. Meanwhile, the National Farmers Union reports that business certainty and confidence within British farming is at an all-time low.

Alongside the obvious economic and social benefits of buying more British food, such as boosting the economy and creating jobs, there are also ethical reasons for wanting more British food to be procured. The Royal Society for the Prevention of Cruelty to Animals has long raised the issue of procuring authorities buying food from overseas that is produced to lower standards than in the UK, such as battery eggs and sow stall pork. Our animal welfare standards in the UK lead the world. Through my Bill focusing on buying British, we will also contribute to cruelty-free procurement becoming the norm.

My Bill will require contracting authorities to publish what proportion of food procured originates from suppliers in the UK. That will finally create an accurate measure of how much food the public sector procures from British farmers.

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[Sarah Champion]

My hon. Friend asks an impossible question and she might want to ask it again to the Minister. In developing this Bill, I had conversations with the relevant Minister and he has been very open, and I know the Minister who is due to reply is also very open to this. I think the block is hesitancy in terms of the legislation and finding a way through, which is why my Bill is terribly modest in that it is just looking at transparency around where those contracts go, with the hope that that will do enough to influence where they actually land, which we would like to expect might be British businesses. So my answer to my hon. Friend’s question is, “Who knows?” And it is a question the British public are asking all the time, particularly when a local business goes bust as a consequence.

On the £1.6 billion contract I was talking about, the all-British bid would have generated over 6,000 good UK jobs and supported a full onshore build of the ships. This bid also promised an investment of £90 million in UK shipyards and a further £54 million in training, apprenticeships and improving the UK skills base. Had social value to the UK been prioritised, as my Bill would encourage, surely it would have won the contract. Instead a sizeable proportion of the work will go abroad at the expense of British jobs and supporting British businesses. My Bill raises the level of importance attached to the origin of goods and services in procurement decisions by increasing transparency around how public sector contracts are awarded and encouraging the uptake of British-originating products.

My Bill also seeks to highlight good employment standards within procurement. When developing the Bill, the TUC shared with me the dire state of employment standards and working practices within public procurement. To be clear, most employers treat their employees well, but it is common for outsourcing to have a detrimental effect on wages and conditions, with outsourced workers more likely to work longer hours, receive less pay and be on insecure or temporary contracts.

[Lloyd Russell-Moyle]

Is it not also a particular problem when procurement is given to a foreign company who will be using workers with different standards and different collective bargaining, which is totally unfair to the British businesses that have to follow British laws and British agreements with trade unions? Providing this data will give a level playing field to businesses who will know where they are being undercut.

[Sarah Champion]

Again, my hon. Friend is absolutely right. If companies pay people appallingly low wages, they can then undercut British businesses that want to pay people well and give them the terms and conditions so that work is fulfilling economically as well as psychologically. Yes, we are losing hand over fist in the current situation.

My Bill would therefore require contracting authorities to consider how they might act to support good employment standards and working practices. My Bill defines good employment standards and working practices as including, but not limited to, compliance with national and international obligations in the field of environment, social and labour law, and collective agreements. The Bill also requires contracting authorities to include reasonable details about how they have complied with their obligations to meet such standards in a contract award notice.

My amendments to existing legislation raise the importance of good work within public procurement, and encourage contracting authorities to award contracts to good employers by attempting to replicate regulation 56 of the Public Contracts Regulations 2015, which relates to excluding suppliers who are not compliant with international and domestic social, labour and environmental laws. It is designed to stop bad employment practices being tolerated within public procurement, such as fire and rehire or contractors refusing to implement the annual uplift of the real living wage.

Great care has been taken in drafting the Bill to avoid including measures that would threaten the UK’s international obligations with respect to trade rules and the agreement on Government procurement. It is also important to note that my Bill would place the responsibility on the contracting authorities, not on the suppliers or UK Government, to publish data on their compliance with the relevant provisions under clause 2.

I hope that my Bill will also influence the conversation on reforming the public procurement system, so I am grateful that the Minister has offered me and the working group the opportunity to meet the civil servants and perhaps the Minister to make changes, if needed, to the national procurement policy statement. Published in June 2021, the NPPS argued that the “huge power” of public procurement expenditure

“must support the delivery of public sector policy priorities, including generating economic growth, helping our communities recover from the Covid-19 pandemic, and supporting the transition to net zero carbon.”

It goes on to outline how:

“Public procurement should be leveraged to support priority national and local outcomes for the public benefit… Contracting authorities should consider the following social value outcomes”

when procuring such goods and services. My Bill seeks to cover all those, but I would be a little stronger on the “should” becoming a “must”. Aside from that, I think we are absolutely on the same page.

To conclude, my conversations with Rotherham businesses and national industry groups have made it clear that the changes I am proposing are welcome and overdue. I defy the Minister to find anyone in the UK who would not see this as common sense. Implementing the changes will increase transparency and encourage more public contracts to be awarded to British suppliers. By supporting this Bill, the House has an opportunity to demonstrate their support to British manufacturers, builders, farmers and SMEs. I thank the Labour Front Benchers for their support, and I am grateful to the members of the working group who helped me to develop it— the TUC, UK Steel, National Farmers Union, the RSPCA, the YPO, the Countryside Alliance, APSI, Bloom Procurement Services, the National Federation of Builders and Jonathan Davey—for all the help, support and guidance they have given me to date.

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[Lloyd Russell-Moyle (Brighton, Kemptown) (Lab/Co-op)]

It is a pleasure to follow my hon. Friend the Member for Rotherham (Sarah Champion), who has laid out a good reason why we need to develop these measures.

It was a pleasure to serve with the hon. Member for Darlington (Peter Gibson) on the Procurement Bill Committee in the last Session, where Labour tabled a number of amendments to further the cause of ensuring that we evaluate social value in contracts. Whether something is British is clearly a key social value for contracts. With British contracts, taxpayers’ money returns into local economies, there are Exchequer benefits, and we tend to have higher and better-quality standards in workers’ rights and environmental rights.

There is, in my view, a real problem with the current process. We introduce standards—be they environmental or workers’ standards—and quite rightly demand that they are high. Then, we say to companies, “Don’t worry. Get around it; ignore it all. Just offshore your production.” In fact, through those standards, we become a great champion not of increasing standards but of destroying jobs in this country.

Some Government Members—not all, but some— would say, “Well, that is an example of why we need to deregulate. That is why we should embrace our Brexit freedoms to ensure that we never get to a place where we are anti-competitive compared with the rest of the world.” The problem is that that is a race to the very bottom. First, it is a race to get below EU standards, then it is a race against standards from Turkey, and then it is a race against standards from China or countries in Africa. Our population ends up poorer and our environment more degraded.

The European Union and the US have implemented carbon border adjustment mechanisms to ensure that a tax is put on to adjust for the saving that a company would make by offshoring. The Government have rightly moved towards adopting the carbon border adjustment mechanism—although it is quite late, I am afraid—but they have not gone far enough. In America and now in Europe, there is an understanding that open procurement, in which we ignore the conditions of bidding companies, is a road to ruin. They have introduced Acts to focus on buying American or European. Despite the naysayers, that has not led to those countries being hauled up before the World Trade Organisation in relation to the agreement on Government procurement. Of course, we are a signatory to that agreement, but the fact that other signatories are able to implement a priority to buy from their own country shows that we should be less concerned about that agreement and more concerned about British jobs, British workers and British companies.

There is a small organisation in my constituency for which we tried to table an amendment to the Procurement Act. It would have meant that non-profit and small organisations could be given a leg-up in public procurement. It would have meant that if a contracting party had already developed a local relationship with such an organisation, it could bypass certain public procurement measures. I am afraid that it was rejected by the Government, but in Brighton we have an example of why it was needed.

Only a few years ago, RISE—Brighton’s specialist domestic violence service, which is one of 180 members of the network of Women’s Aid organisations and provides local expert holistic services for women, children and LGBT survivors of domestic abuse—was defunded when it lost its public procurement bid to an international consortium. It was set up 50 years ago and became a registered charity 30 years ago. It argued for and successfully got the first all-women’s refuge in Brighton. Sixteen years ago, it set up the first LGBT service for domestic abuse survivors in the country, and three years ago it lost its public procurement and had to start from scratch.

The reality is that that procurement did not take into account the social value and whether the terms and conditions negotiated through trade unions would be included. That has meant that a large number of people do not have the service they expect. Surprise, surprise, the contractor running the women’s refuge—a nice, very good housing association, but not a women-led specialist organisation in this area—was not able to offer the wraparound services, and the council had to provide additional emergency funds to RISE so that it could go into the refuges and provide the wraparound services that the women needed. The procurement process defunded a local women-led organisation and cost the council more because it had to provide additional funding to that organisation. It is a loss for women in my city and for the council, which has had to pay more money, all because there is not a proper framework for the council to evaluate the situation and ensure that, rather than just having this neoliberal public procurement—a blind process—we work with and nurture communities.

What is the end result? The next time the procurement comes around, RISE, which was a strong, healthy organisation, will be a weak, diminished organisation that will not be able to bid competitively against a national or international body. In the end, there will be fewer providers in this space, and of course anyone who did their basic GCSE or O-level economics, like I did, knows how the market works if there are monopoly providers: the price will be higher, councils will have fewer options and the taxpayer will lose out. We need to start turning that around.

Unfortunately, as a result of the loss of the bigger bid from RISE, and thanks to the cuts that we are being forced to implement in Brighton and Hove as a result of the continuing austerity and the failure to support local councils, this year it has not been able to bid for £129,000 of additional services, including £5,000 from the third sector grant and £99,000 of new burdens funding for the LGBT dispersed refuge, meaning that we will have no specialist LGBT refuge support in the city. That will put pressure on the women’s refuge, in which we have maintained good separate but equal services—that is how it should be—and that is now under threat. There is also a threat to the therapeutic wellbeing service for women and children. In these uncertain times, if we had started the process differently, we would have ended up with a flourishing local community.

In December, the Public Administration and Constitutional Affairs Committee, on which I sit, produced a report in which we found that the Government have not demonstrated that they have consistently used their purchasing power to support local and national policies, as my hon. Friend the Member for Rotherham said earlier. The big problem we found is that there is no data. Without data, we cannot provide policy, and without policy, we cannot correct the problem. We see that problem happening all around us—we see local communities losing out—but we cannot get the data that is needed.

A number of the international agreements that we have signed, such as the Australia trade deal, had revolutionary clauses around gender, for example, but if we are not monitoring some of these issues, we will not be able to put clauses in future trade deals, and we will bind ourselves in. The only reason that we could include the clauses on gender and trade was the fantastic work that my hon. Friend did to ensure that the data was collected.

The Bill is the next step towards strengthening the hand of British Trade Secretaries when they are negotiating around the world. It is about ensuring that we say, “Yes, we want free, fair and open trade, but we also want trade that levels up, not levels down.” Government Members understand the words “levelling up”, but I am not sure they have managed to deliver on the concept, so understandably, they would struggle with it in international treaties. The Bill starts to build on that process.

We need look only at the real problems we have seen with shady contracts under this Government to see that we need public procurement reform. I do not believe that the Procurement Act 2023 did that successfully enough, and this Bill is needed to fix some of those issues. I am delighted that the Government have agreed to meet my hon. Friend, and I know that when Labour is in government, we will start to fix some of the messes into which this Government have led us.