Procurement Bill [ Lords ] (Ninth sitting)

Debate between Lloyd Russell-Moyle and Florence Eshalomi

Committee stage
Tuesday 21st February 2023 Public Bill Committees

[Florence Eshalomi (Vauxhall) (Lab/Co-op)]

I beg to move, That the clause be read a Second time.

It is a pleasure to serve under your chairship again, Mr Mundell. It is good to see all hon. Members back and raring to go on our favourite subject, the Procurement Bill. The new clause, which we think is really important, would introduce a public interest test when contracting authorities are considering outsourcing public services that are currently in-house, and when contracts are up for renewal.

The Opposition strongly believe that there is a place for the delivery of public services by private companies. Many private companies deliver services efficiently, save the taxpayer money and represent the best of our procurement network. When outsourcing is done well, both the public and companies benefit. I highlight to the Minister that the new clause is not intended to stop good outsourcing practice, nor is it intended to harm suppliers providing public services. However, we have to remember that we are talking about public money and it is critical that we outsource only when it offers value for money for the public—not just in relation to the contract, but for the wider public sector.

When it is done wrong, outsourcing has the potential to offer poor value for money, erode rights and deliver poorer services. In effect, more public money can go to companies that are just making a profit off the taxpayer, while services could be delivered to the same or a better standard in-house, without the profit premiums. Decades of relentless outsourcing have seen hundreds and thousands of staff transferred from employment by local councils, NHS trusts, police authorities, universities, colleges, schools and utility services to external providers, such as companies or charities.

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

My hon. Friend is making very good points about outsourcing. It is quite right that we support outsourcing to good companies that pay good and fair wages and offer good terms and conditions, but savings are far too often made by treating workers poorly, by undercutting their pay and terms and conditions, and by trying to offload workers who are needed for the service. This test would allow councils to check whether they could do it better in-house.

[Florence Eshalomi]

I thank my hon. Friend for that really valid point. It is important that we look at what has happened. Over the years, there have been many examples of outsourced services in which staff working conditions have been eroded and staff pay has not kept in line with inflation. The situation that we are seeing now is that staff are walking—they are voting with their feet and choosing to lose a day’s pay by going on strike. That is a result of some areas of outsourcing. From catering to social care, from cleaning to IT and HR services, almost no area of public services has been left untouched.

Too often, outsourcing is accompanied by deterioration in the pay, pensions and terms and conditions of the staff delivering the service. That almost creates a two-tier workforce of directly employed staff working alongside contractor staff, as well as a two-tier workforce within the contractor. The Transfer of Undertakings (Protection of Employment) Regulations can offer some limited protection for staff who are transferred to an outsourced contract, but staff recruited by the contractor after transfer have no such protection. Those inferior conditions can translate to lower costs for contractors, which can play a crucial role in their offering a cheaper tender and winning contracts.

A major flaw of this model is that it creates a false economy. The cost of the service is superficially low, but over time, staff have to claim universal credit. People retire without enough to live on and have to claim pension credit. Lower pay and insecure work have a negative impact on mental health. The decline in the number of decent public sector jobs in the community has a chilling effect on the local economy. The dots are not joined and the wider economic costs not considered.

In some regards, the supposed benefits of outsourcing have been eroded by the reality of contracting out services in recent years. There has been a notable turn towards insourcing—the process by which a public authority takes a service that has been contracted out and brings it in-house to be delivered by directly employed staff. However, we are still a very long way from the presumption that services should be outsourced only if it can be shown that the work cannot be delivered just as effectively in-house. Hundreds of thousands of carers, cleaners, porters, security staff and catering staff in our public services workforce are among the worst-off and most insecure workers in the UK.

Creating a check on such practices should be an objective of the Bill. That could be achieved through a public interest test to require contracting authorities to think holistically and outsource public services only when it is demonstrably in the public interest and when a robust assessment provides clear evidence that the services could not be better delivered in-house.

If a contracting authority is considering outsourcing public services that are currently delivered in-house, or where contracts are due for renewal, it should ensure that outsourcing or re-contracting passes a pre-procurement test and provides greater public value than direct service provision. The new clause would require the contracting authority to

“demonstrate to the public, service users and its employees that it has thoroughly assessed the potential benefits and impact of outsourcing the service in question against a public sector comparator with assessments being based on criteria to be set by the Secretary of State from time to time, including taking a five year consideration of—

(a) service quality and accessibility;

(b) value for money of the expenditure;

(c) implications for other public services and public sector budgets;

(d) resilience of the service being provided;

(e) implications for the local economy and availability of good work in relevant sub-national labour markets;

(f) implications for public accountability and transparency;

(g) effect on employment conditions, terms and standards within the provision of the service to be outsourced and when outsourced;

(h) implications for public sector contributions to climate change targets;

(i) implications for the equalities policies of the contracting authority and compliance with the public sector equality duty.”

Importantly, the public interest test would take place pre-procurement, and not all services subject to the test would eventually go to market. To increase transparency around those services that enter into the procurement process, the Bill should mandate information about outcomes of the associated public interest test to be published.

Under the new clause, the contracting authority and the provider of the outsourced service would also be required to

“monitor the performance of any contracted service against the public interest test and the stated objectives set by the contracting authority pre-procurement to demonstrate that outsourcing the service in question has not resulted in a negative impact on any of the matters mentioned in subsection (2)(a) to (i).”

Labour is clear that we would run the biggest programme of insourcing for a generation. We recognise the value offered by those delivering outsourced services, but we have concerns about the current scale of outsourcing. New clause 3 would lay out a clear test for outsourcing, ensuring it is done only when it is in the interests of the public, and that we do not hand out public services on the cheap.

We must create a culture of value for money throughout the public sector and avoid waste wherever we can. We believe that the new clause would help to create that culture. I hope that the Minister will give it due consideration and support it.

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[Lloyd Russell-Moyle]

I rise to support new clause 16 because of what happened in Brighton, which showed that it is important to have overall guidelines rather than discretionary guidance on this issue. In that case, there were multiple contracting parties, including Brighton and Hove City Council. I have no doubt that, had it contracted the service on its own, it would have seen the value of the important work that RISE has done for decades in the city. RISE is led by women, for women. It fights domestic violence, saving and supporting women who have undergone it, and provides refuge as well as counselling support for the women and their children. However, the contract was given jointly by Sussex police, East Sussex County Council and, partly, West Sussex County Council, and the social provisions in Brighton and Hove City Council’s guidelines did not match up with the social provisions in East Sussex’s guidelines. My understanding is that there were no provisions in the Sussex police guidelines.

When the contract went out for joint tender, the sections that were not compatible with each other were removed, because they were voluntary. This new clause would prevent that from happening again. In the case of RISE, it would have enabled the service to be provided. Instead, the contract was given to a housing association. I am sure it is a lovely, well-meaning organisation, but it is a housing association, not a specialist domestic violence organisation or a women-led organisation. It is not an organisation that has any roots in the city.

[Florence Eshalomi]

I thank my hon. Friend for giving such a powerful reminder of why this new clause is so important. He said that the contract was given to a housing association. Does he agree that the women who need this specialist service may not feel comfortable going to a housing association, because part of their issues and problems arise from housing?

[Lloyd Russell-Moyle]

Quite right. This housing association had no footprint at all in Brighton and Hove and a very limited footprint in East Sussex. The women who were in that organisation’s housing might find it more difficult to go to them, because it is not a truly independent service.

Whether that is the case or not, what then happened was that the refuges and some of the counselling services that are provided in the city were sub-contracted out to some of the RISE people. So RISE picked up some bits of work, but not all of it. It could not offer the women wraparound support, just support in some very specific areas, so the service potentially became worse for women. A top-slice of the money has been taken out of the area for management and bid-writing fees and costs, which such organisations all take, and given to an organisation that is based nowhere near Sussex and does not have that specialism.

When women then complained and protested during covid, through covid-compliant protests, they were threatened by the police and told their protest was wrong and that they should not be protesting. Interestingly, the police allowed my hon. Friend the Member for Hove (Peter Kyle), the hon. Member for Brighton, Pavilion (Caroline Lucas) and me to address the covid-compliant demonstration. There was no problem with that; it was only as we left that the police pounced on the women organisers, in front of their children, and tried to fine them. That was particularly egregious. I represented those women and said that I would give statements to support them, and in the end the police dropped the case.

Even when women tried to speak up, they were abused and harassed by the police—they were women who have come through domestic violence and who have been RISE service-users. It was important to commission RISE, but it was also important that women themselves had their voices heard. At all stages—in the commissioning and the outcome—women’s voices were removed and shut down. New clause 16 would give that protection.

Even if the Minister does not support the new clause—I would like him to, but I assume he might not—I hope he will reassure us that he will strengthen the section in the guidelines on women-specific services, such as those who have suffered domestic abuse, and place additional emphasis put on ensuring that local women’s voices are heard, while also allowing some of the competitive tendering to be waived. That is already possible, but we need stronger guidelines, particularly for multi-authority procurement. We will push the new clause to a vote, but I hope the Minister provides those reassurances, as I suspect we all broadly agree on the issue.

Procurement Bill [ Lords ] (Fifth sitting)

Debate between Lloyd Russell-Moyle and Florence Eshalomi

Committee stage
Tuesday 7th February 2023 Public Bill Committees

[Florence Eshalomi]

It is a pleasure to serve under your chairship again, Mr Efford.

Amendments 13 and 14 reiterate our amendments 15 to 19 to clause 29, which we debated last week. We think that competitive and due process should be followed as much as possible, and that the bypasses enabled by clause 41 should be used as little as possible. Although we understand why direct awards might be needed, we believe that they must be used with caution.

One element of the clause that we find troublesome is the provision on excludable suppliers and the public interest test. The rationale for direct awards can be related to defence, as under paragraph 18 of schedule 5, and the matters listed in the “overriding public interest” test in clause 41(5) are serious. We understand why the Government may look to bypass many of those grounds should the issues be serious enough, but we do not believe that it should ever be the case that threats to national security are awarded contracts, in particular under direct awards.

Previously in Committee, we attempted to move national security concerns from discretionary to mandatory grounds. We feel that the necessary amendment would require us to go beyond the public interest test for excluded suppliers and exclude suppliers with national security concerns across the board. The fact is, as we go further up the food chain of security sensitivity, the risk to our country from exposing our supply chain to national security threats becomes more severe.

To take the public interest test on constructing, maintaining or operating critical national infrastructure, we understand that that is of the utmost importance for the country, but we should not expose our network to security threats if the need for such a test is so great. The risk of doing so is catastrophic. It could mean malign surveillance in vital infrastructure undermining our entire security system and the fundamental safety of the state. In such cases, there must be a clear instruction for contracting authorities to look for alternative provisions that do not put the state at risk.

We feel that our amendments address such proportionality concerns. They would ensure that we never turn to national security threats for procurement, preventing the threat that those could cause to critical infrastructure. The Minister will say that we need flexibility in the system and that decision makers can assess the threat where necessary, but the reality is that we cannot expect procurement officers to be national security experts and to spot every threat that could be present with a supplier with national security concerns.

It is worth bearing in mind that, in high-pressure situations when wrong decisions can have hugely damaging unintended consequences, proper and strong legal checks and balances are critical, even at urgent times. Again, we may want to remember what happened during the covid pandemic. The National Audit Office investigation into Government procurement during covid-19 found:

“General guidance issued by the Crown Commercial Service recommends that awarding bodies publish basic information about the award of all contracts within 90 days of the award being made. Of the 1,644 contracts awarded across government up to the end of July 2020 with a contract value above £25,000, 55% had not had their details published by 10 November and 25% were published on Contracts Finder within the 90-day target.”

The result was that £10 billion-worth of PPE was written off, with auditors rebuking the Department of Health and Social Care for its management of taxpayers’ money during the pandemic. The Government are now locked in legal battles with the companies that failed to deliver on their contractual obligations. In the first quarter of 2022-23, the Government are still disputing 176 contracts worth nearly £3 billion. It is fair that even in an emergency we must abide by solid procurement principles if we are to avoid unintended consequences that put public finances and our national security at risk.

I think it is fair to say that we cannot be so arrogant as to assume that this would not be done inadvertently. During her speech on Second Reading, which I have alluded to already, the hon. Member for Rutland and Melton (Alicia Kearns) highlighted several issues that point to the need for tightening up in this area. She said:

“At the moment I have local authorities from around the country writing to me saying, ‘Alicia Kearns, can you please give me advice on whether or not we as the local council should procure from this company?’ That cannot be the way we do this. We must ensure local government is not the entry point for hostile states.”

She added:

“Finally, on supply chains, public authorities need to be able to investigate, and we must ensure that this goes high enough up the chain. Canadian Solar is looking to build a solar plant in my constituency. It sounds lovely—'Canadian Solar? What a great company’—but when we actually look into it, it is GCL-Poly, a Chinese-owned, Chinese-run company that is complicit in Uyghur genocide. We must ensure that the burden to investigate is properly addressed.”—[Official Report, 9 January 2023; Vol. 725, c. 363.]

I do not want to say that all these companies are necessarily a national security threat and need to be addressed by the Bill, but the points made by the hon. Member for Rutland and Melton and others show how easy it is for suppliers that may be of concern to the state to slip through the cracks. All these things concern us, and they should concern the Minister. With such risks present, I do not think there can ever be a proportional use of a national security threat in direct award procurement.

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

My hon. Friend is making very good points. We have the Committees on Arms Export Controls, which scrutinise not just Government sales but commercial sales abroad. Is there not a case for a similar Committee, or for the existing Committees to have a wider scope, to look at imports that might be national security threats? Would that not be a way to shine some light on this?

[Florence Eshalomi]

I thank my hon. Friend for that point, and I hope that the Minister responds to it. It shows the many different angles from which, inadvertently, we could see national security threats coming into the country. We must make sure that we avoid that. We need to look at the issue of national security threats when we are directly awarding procurements.

There is very little in the clause in legal terms preventing the use of national security threats in direct awards; as my hon. Friend highlights, there is no guarantee that they will not be used. Our amendments 13 and 14 would prevent threats from entering the system via direct awards. I hope that the Minister will support them.

Procurement Bill [ Lords ] (Third sitting)

Debate between Lloyd Russell-Moyle and Florence Eshalomi

Committee stage
Thursday 2nd February 2023 Public Bill Committees

[Florence Eshalomi]

As the Minister outlines, the clause obliges authorities to divide larger contracts into smaller lots where that is appropriate for the contract. That is a useful and necessary power, and it is one that we hope SMEs will welcome. Breaking down contracts is a good way of making them more accessible for smaller companies. I mentioned the evidence from John Lichnerowicz, who said that it can be difficult for all but larger suppliers to take on bigger contracts that are not broken down. His written submission states that

“overstretched Procurement Departments would lump requirements into a single large procurement which would go to only the biggest companies in their field who would then have the freedom to pick their favourite sub-contractors effectively eliminating the contribution of equally capable sub-contractors and adding a main contractor’s margin into the sub-contractor’s costs for little benefit”.

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

In a number of contracts awarded recently by my council, the overall contractor ended up subcontracting people who had made separate individual bids but did not have the capacity to take on the bigger contract and therefore were not awarded it on that basis. Having big contracts is just a way of diverting money away from the taxpayer and into shareholders’ pockets, is it not?

[Florence Eshalomi]

I thank my hon. Friend for that valuable point. What we want for SMEs, and what SMEs tell us they want, is fair access to Government contracts—public money that should be going back into local communities up and down the country. Unless we ensure that larger contracts can be broken up into smaller lots and awarded directly to smaller companies, there will be a repeat of what we see with those big contracts. No one wants those same practices to be employed all over the country. I want the Minister to stress what oversight will be put in place to ensure that the important provisions in the clause are carried out and to ensure that all our SMEs truly benefit from public contracts.

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[Florence Eshalomi]

While our response to amendments 30 and 31 is lukewarm, we think that they are important. We want all contracting authorities to consider value for money for the taxpayer when making procurement decisions, but there is a substantial risk of accepting below-value tenders for bids. Procurement has to be sustainable, and we know too well the risks when we get that wrong.

When considering the Bill, we must all remember 15 January 2018 and the collapse of Carillion. When it went into liquidation, it employed 42,000 people, including nearly 20,000 people in the UK. It also had a liability of £2 billion to some 30,000 suppliers and subcontractors, some of which sadly fell into insolvency themselves as a result of the collapse. While there are excludable grounds relating to poor procurement practices set out in later clauses of the Bill, I do feel that these amendments provide another check against the reckless behaviour of companies such as Carillion.

In 2018, following the collapse of Carillion, the then Chair of the Public Administration and Constitutional Affairs Committee, the hon. Member for Harwich and North Essex (Sir Bernard Jenkin), said:

“It is staggering that the Government has attempted to push risks that it does not understand onto contractors, and has so misunderstood its costs. It has accepted bids below what it costs to provide the service, so that the contract has had to be renegotiated. The Carillion crisis itself was well-managed, but it could happen again unless lessons are learned about risk and contract management and the strengths and weaknesses of the sector.”

[Lloyd Russell-Moyle]

To some extent, has that not already happened again on the east coast franchise? Twice, unrealistic bids have been accepted and then collapsed, requiring the Government step in. It is not unusual for that to happen, so the amendments are good but probably not strong enough.

[Florence Eshalomi]

I thank my hon. Friend for highlighting that those lessons do not seem to have been learned.

The hon. Member for Harwich and North Essex went on to say:

“Public trust requires that outsourcing better reflects public service values. The Government must use this moment as an opportunity to learn how to effectively manage its contracts and relationship with the market.”

The amendments will not fully solve the problems associated with Carillion, or the problem just mentioned by my hon. Friend the Member for Brighton, Kemptown, and a culture shift in procurement should have taken place following the collapse of Carillion. However, they do provide a safeguard for authorities to use against abnormally low and unsustainable bids.

Finally, will the Minister outline the wider impact of changing “most economically advantageous tender” to “most advantageous tender”?

Procurement Bill [ Lords ] (Second sitting)

Debate between Lloyd Russell-Moyle and Florence Eshalomi

Committee stage
Tuesday 31st January 2023 Public Bill Committees

[Florence Eshalomi]

I oppose amendment 28; it would remove Lords amendment 46, which was added on Report. Clause 13 currently mandates the Government to give due regard to a number of important principles before publication of their national procurement policy statement. Those principles follow on from the procurement principles promised in the Bill— namely, promoting the public good, value for money, transparency, integrity, fair treatment of suppliers and non-discrimination.

Those principles are important. We know that public good allows us to put what we believe is best for the country at the heart of procurement. When we also consider the huge amount of money spent on procurement —ultimately, it is the public’s money going towards delivering goods and services—it is right that the Government expect the money to be spent in the public’s interest. Procurement must always have that idea in mind, and it cannot be driven by any other aim of individuals in Government or other private individuals.

[Lloyd Russell-Moyle]

It is particularly important to include these principles in the Bill. Although we all agree with them, have there not been many accusations that during covid, the principles were not followed? We know that a huge amount of reclaimed money has still not been discovered. There were fast-tracks for mates and friends with no experience. People lobbied and pushed for their mates to get contracts—we know that because one Member of Parliament has had to resign over it and the scandal is ongoing. Without having these principles in the Bill, there is a danger that even if Conservative or other Governments are whiter than white, the public will not believe it and think that something murky is going on? That destroys trust in politics, so including them will protect us all.

[Florence Eshalomi]

I thank my hon. Friend for that important point; I will highlight that further as I make progress.

It would be completely wrong, especially when households up and down the country are struggling to put the heating on during this cold winter, to not carry out the due diligence and get every bit of public value out of our procurement budget. Again, this is public money and, as my hon. Friend highlighted, transparency is even more critical now. The Government must not take money from the taxpayer and then be opaque about how it is spent. As has been highlighted, we saw during the pandemic why that principle was so important. Shining a light on our procurement not only is fair, but makes it more efficient and helps to achieve more value for money for the public.

During the pandemic, we saw billions of pounds of personal protective equipment written off. I believe that greater transparency in the process could have helped prevent some of that waste and some of the scandals that unfortunately lie at the Government’s doorstep today. We have concerns about transparency in the Bill as it stands, and I want to speak about that at greater length.

Integrity ties all this together. Ensuring good management and fighting against fraud and corruption is critical in ensuring public trust in the system and ensuring we get value for money. That links closely with transparency—we need a transparent system where integrity naturally flows and corruption is highlighted. It also links to ensuring that the public get their money back when contracts are not carried out or are carried out to a poor standard. Too often in the current system, those who deliver poor services get away with it. They are even awarded further contracts despite poor performances. We do not see enough money clawed back: just before Christmas, the figure was just over £10 million from fraudulent PPE contracts during the pandemic. Perhaps the Minister can update us on that; I hope that it is far more, considering the amount of waste in that area.

Fair treatment of suppliers is also vital to maintaining the best possible procurement system. I know that that may be frustrating at times when considering wider policy goals. It is always tempting to mandate certain procurements to support groups such as SMEs or to follow agendas such as levelling up, yet this is equally as important as the other principles.

We cannot have favouritism in the system or decide what is best based on the supplier and not the merits of the offer. As my hon. Friend the Member for Brighton, Kemptown highlighted, we saw that during the pandemic, with the VIP lanes ultimately being ruled unlawful in court. In her ruling in January last year, Mrs Justice O’Farrell said the Good Law Project and EveryDoctor had established that the VIP lane system was

“in breach of the obligation of equal treatment”.

She went on:

“There is evidence that opportunities were treated as high priority even where there were no objectively justifiable grounds for expediting the offer.”

It is clear that that cannot happen again. I hope the Minister will outline what steps are being taken to ensure that that principle is adhered to and that there are consequences for going against it.

Similarly, non-discrimination is an important principle to ensure we show no favouritism among suppliers. That is particularly important when we sign up to trade agreements and want to ensure respect between partners. I expect the Minister to say that we should trust the Government and that it will be in a policy statement, but if the Government can go against their own words in the Green Paper, why should we trust them now?

More importantly, the amendment ensures that future policy statements from any Government would have to follow these principles in procurement. I think we all agree that the principles are important, and should a future Government want to go against them, that should be done via primary legislation and not through a policy statement with far less oversight. Primary legislation can always be introduced, so we are not tying a Government to the principles for life, but given their importance to the system that runs through the Bill, any policy note brought by this piece of legislation should take this into consideration. I urge the Government to think carefully and withdraw amendment 28.

I will now speak to amendment 7 and urge the Government to go further to strengthen the procurement principles in the policy statement. Our amendment 7 would introduce cyber-security as a strategic national priority for the Government. The past 12 months have reminded us of the risks to our security from every corner of the globe—from nation states, criminals and rogue actors. This year’s National Cyber Security Centre annual review confirmed that cyber-crime continues to be the most significant threat for consumers and small businesses. Looking at the big picture, it is clear that the cyber-security threat is not at the forefront of minds when it comes to risk, despite the recent joint warning from the heads of MI5 and the FBI that commercial organisations on both sides of the Atlantic are increasingly being targeted by state-sponsored hackers. This is a challenge that requires us to raise our game domestically and collaborate more effectively internationally.

Endpoint security is a major challenge, particularly for the public sector. The Government’s cyber-security strategy is very welcome, but fails to mention device security once. When it comes to cyber-security, everyone thinks about software, but the resilience of our PCs, laptops and printers is often under-appreciated. A lack of protection for hardware in our schools and hospitals leaves the UK vulnerable to malign actors, and data shows that the Government remain an attractive target for cyber-attackers, with 40% of cyber incidents between 2020 and 2021 affecting the public sector. The Chancellor of the Duchy of Lancaster recently acknowledged that the UK is now the third most targeted country for cyber-attacks, behind only the USA and Ukraine.

Combating fraud requires the Government, businesses and individuals across the UK to work together. Greater co-operation and knowledge sharing can make a real difference. Raising awareness of the different types of fraud we face and its impact on all corners of the UK is the first key step to arming us with the knowledge to stay safe online. The NCSC’s cyber aware campaign—which in the run-up to Christmas revealed that victims of online shopping scams in the same period last year lost an average of £1,000 per person—is a great move in the right direction. We need to ensure our policies and requirements have greater teeth to better protect UK plc, and there are three simple steps that the Government can take to do that. Now that the UK has left the European Union, we are in a much stronger position to defend our national interest within our own public procurement rules. If the Bill allowed the Government to exclude suppliers to the public sector on cyber-security grounds, that would send a strong signal to malicious actors around the world.

Our amendment would insert cyber-security requirements as a required purchasing criterion for public sector procurement into the national procurement policy statement, which sets out national priorities and guidance for contracting authorities. It would make cyber-security one of the strategic national priorities for procurement, and would strengthen the Bill’s national security focus. I hope it gets cross-party support and is accepted by the Government, as it would help to safeguard the UK from attacks from rogue actors and nation states, and would bring us into line with best practice from across the world.

Procurement Bill [ Lords ] (First sitting)

Debate between Lloyd Russell-Moyle and Florence Eshalomi

Committee stage
Tuesday 31st January 2023 Public Bill Committees

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

Very often, these contracts consider only value for money and the relationship between the contracting parties, not the consumer. We have tabled other amendments that look at social value and the consumer, but is it not important, particularly in relation to utilities, that the consumer is key? The outcome of that is that the consumer gets a better service, rather than the contracting parties scrimping and saving, or slicing off money for their friends.

[Florence Eshalomi]

Hear, hear, and I thank my hon. Friend for making that important point. We all remember the summer flash floods almost two years ago. People may think, “Actually, London is insulated from that”, but a number of my constituents were affected, and one issue that they outlined was the failure of Thames Water to maintain its pipes. Thames Water is another utility company that is essentially rewarding its shareholders instead of making sure that the public, which receives a vital and critical service from the company, is treated fairly. Customers see their water rates increasing and ad hoc repairs causing disruption on many roads, but all some of those companies think about are their shareholders, who continue to receive massive payouts. When we talk about procurement contracts, it is important that we think about the end users—the customers, the residents, our constituents—who all deserve value for money.

[Florence Eshalomi]

I thank the hon. Lady for making such a vital point. The Minister will wonder why I have so many examples, but just last week, I was notified that another local bank in my constituency, NatWest on Clapham High Street, will close and that a number of the branch’s customers had not been told. That is just another example of key services on our high streets, which many of our constituents rely on, disappearing. It is important that we remember the public element of those key services that continue to benefit from public contracts.

[Lloyd Russell-Moyle]

I want to raise the disastrous Southern Water and its continued spillage of sewage into our seas. Many of my constituents have become ill from sea and river swimming. Southern Water was prosecuted and found guilty of breaching water quality standards and pumping pollution into our rivers and oceans, but in the same year, the chief executive received a six-figure bonus. Clearly, there is something wrong with these utilities: there is no competition, never any procurement and they have the contract permanently, forever and ever. Does a clause that does not allow a company to be excluded from any form of procurement in the future simply let such a company continue to misbehave, as regulations are weak and shareholders run away with the profits?

[Florence Eshalomi]

My hon. Friend makes a valuable point. A number of these companies know that they can get away with it. What they are doing is effectively legal, yet for our constituents who have to suffer the consequences it is not fair. The Government have spoken about trying to make a Procurement Bill that is fair, transparent and value for money, but this is not value for money because our constituents will receive hefty fines if they are a day late with their water bill or even if they send a package without the correct postage. We see the situation with Royal Mail and the chief exec, who, when he appeared before the Business, Energy and Industrial Strategy Committee a few weeks ago, was not very clear about the bonus he received, even though the figures were there and the Chair quoted them back to him. It cannot be acceptable for managing directors, chief execs and CEOs to continue to receive big payouts and for their shareholders to be paid while the services that our constituents and the public rely on are not delivered.

[Lloyd Russell-Moyle]

The case of British Telecom and Openreach is another good one. In my constituency, they planned to make all the engineers redundant and to move them to a place in the midlands at lower pay through a fire and rehire scheme. Fundamentally, that means that people will not have well-paid local engineers ploughing money back into the local economy. Is that not the problem of trying to centralise services and underpay engineers and technical staff? The profits go to offshore companies and they do not get recycled into the local economy.

[Florence Eshalomi]

I thank my hon. Friend for making such a valuable point. I am sure that Members will remember the fantastic private Member’s Bill on fire and rehire promoted by my hon. Friend the Member for Brent North (Barry Gardiner), which we debated in the House. Sadly, the Government voted it down. Throughout the pandemic, up and down the country, we saw a number of big multinational organisations using the cover of the pandemic to fire their staff, make drastic changes to their work conditions and try to re-employ them on lower wages and weaker conditions. In organisations such as British Gas/Centrica and British Airways, dedicated levels of service from staff were thrown out of the window, yet those companies continue to receive big payouts for their shareholders and CEOs. We need to address this situation; the Government could have addressed it, but they failed to do so. We have a Procurement Bill in front of us that could help to address some of the loopholes, yet the Government are failing to take it on board.

Perhaps the most frustrating thing for our train passengers is the poor service that they continue to receive while they know that the train operating companies that do such a poor job will continue to be rewarded with those contracts. LNER runs the east coast main line and we might think that it would face similar logistics to Avanti, yet it has nowhere near the same problems. It is not just a timing issue. It is shameful that until 27 November 2020, Northern rail services between some towns were carried out using bus-like Pacer trains that were designed to be inexpensive temporary solutions in the ’80s.

We have heard a lot about levelling up, but we cannot level up when we have such inequal transport across the country. I say that as a Londoner, where we have Transport for London and regular buses. Whenever we leave—this issue is raised by many Members from all parties—we see that the level of service and transport provision across the country is not fair.