Procurement Bill [HL]

Lord Fox Excerpts

Committee stage
Monday 4th July 2022 Grand Committee

[Lord True (Con)]

My Lords, I will have to be advised on that. I have been advised that they are the result of discussions. If that is not the case, I will set the position clearly and straightly when I come to wind up the debate. I have been led to believe, and know from my own involvement in the matter, that there has been a good deal of agreement between the United Kingdom Government and the Government of Wales. I will certainly confirm that in winding up.

The group also contains a number of technical amendments which are required to ensure that provisions relating to the Bill’s application in the devolved Administrations function properly.

To repeat what I said at Second Reading, I regret that the Scottish Government have opted not to join the Bill. They will retain their own procurement regulations in respect of devolved Scottish authorities. I am sure we would all welcome our Scottish friends if they wished to join the new system proposed by the Bill. Taxpayers and public services alike across the whole United Kingdom would benefit from that. However, at this juncture I am able to lay only those matters requested by the devolved Administrations in Wales and Northern Ireland. I beg to move.

[Lord Fox (LD)]

My Lords, I thank the Minister for his apology at the beginning, which I believe to be sincere and heartfelt. I also thank him, I think, for his introduction of the first of these 50 amendments; it was relatively short, given that they come with little explanation. It is said that there is a productivity crisis in this country—not so in the Cabinet Office amendment-generation department. The Minister can be proud of its performance.

More seriously, I commend the Bill team and the Government Whips’ Office, who have been wrestling with this leviathan of amendments, not least over the weekend. I thank them for their hard work. I will return to the process we are facing after making a few comments on the amendments, particularly around the covered procurement element.

Amendment 1 and several others seek to clarify things by defining covered procurement. I remain confused about where this phrase comes from and why it was necessary. There was no sense from the Minister’s introduction as to why it was necessary to come back after Second Reading with a new phrase. Can he say where this term comes from? Is it employed elsewhere in legislation? I think it is in contract law but it was difficult to find other manifestations of it. I should remind the Minister that, every time a new term like this arrives in legislation, it proliferates a great deal of other legislation because each new word or term will be tested to the limit in the law. If we start bringing in new terms such as this, the Bill will be a lawyers’ enrichment fund—I can see the lawyer opposite nodding in agreement—and that is not a good thing for the country or for government.

In his discussions, the Minister said that many of these new amendments came from consultation that was subsequent to Second Reading. Avoiding the obvious question as to why Her Majesty’s Government did not consult more beforehand, I would like to know which organisations and individuals put forward the need for this change. My guess is that it was not an external force but an internal one, and possibly that the Cabinet Office, having used one lawyer, decided to use a different one who had a whole set of different opinions on the legal nature of the Bill, and that is where the vast majority of these amendments have come from. Far be it from me to say what the benefits are of changing a horse half way across a stream, but we are, I suspect, reaping the consequences. If I am wrong, I am happy for the Minister to tell us so or to publish the consultation that happened subsequent to Second Reading. I will be happy to admit that that was not the truth.

As we noted at Second Reading this is an important Bill, dealing as it does with the technical process for managing a considerable amount of money spent on behalf of the British people by public institutions. We support this process. We noted that it needs to be in the public interest, as well as providing value for money. The objective of this Committee process should be, and should remain, to have a proper debate around how such issues are brought to the fore in this legislation. However, because of the sheer incompetence of the Cabinet Office—a Cabinet Office that, I note, recently published its guide to improving the quality of the legislative process—we are instead pulled into a debate around process.

During Second Reading, there seemed to be a measure of good will. My noble friend Lord Wallace spoke about the need for a co-operative process and the Minister seemed to agree. Subsequently, as the Minister has pointed out, with fewer than four days before the first day in Grand Committee, we were confronted with 350 government amendments. That could have been managed in a co-operative way, but that did not happen. Even if we had to have the amendments, to drop them with no warning so near to the process was an inappropriate way of being co-operative.

Then, at 8.56 am on Sunday, which I remind everybody was yesterday, we all received an updated grouping of amendments. In this, there were 77 changes from the document we had received on Friday—I repeat, 77 changes—with the shape of the groups radically changed. For Members to be presented with so many changes, and then for those changes to keep on moving, right up to the wire, is unacceptable. I stress again that this is not the fault of the Government Whips’ Office, which I suspect was kept at work all weekend thanks to this process and the Minister’s insistence that we plough on with the Bill in the way that was originally planned.

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[Baroness Noakes (Con)]

We have not received it.

[Lord Fox (LD)]

I will correct my speech. It has not even been received by all the interested parties, which makes it worse.

Furthermore, to date, the Cabinet Office has not provided proper explanatory statements for each of the new government amendments. There is nothing in the current Marshalled List. The eighth group, which we had planned to debate today, contains a group of amendments that was wholly absent from the Minister’s original letter and the table that some, if not all, of us received when that letter came. Essentially, we have had no time—hours, at best—to consider these amendments.

More than that, the Minister stressed the value of the external community and the input we get from interested parties in this legislation. Those interested parties have not had a little time to consider these amendments; they have had no time. They are not on the record for those bodies that can feed in and positively reinforce your Lordships’ legislative process. We are missing all that. So never mind the unintended consequences of this legislation—we do not even know what the intended consequences are.

For this reason, I put the Minister on a warning that I will object to each of his amendments. When the Question on Amendment 1 is put, I will be not content. My understanding of the process is that, in Grand Committee, this will mean that the amendment will need to be withdrawn.

[Baroness Hayman of Ullock (Lab)]

My Lords, where do I start? This is a really important and long-awaited Bill, so it is incredibly disappointing that, after so much time, the Bill was not fit to have been published when it was. With all these amendments, it is quite different from what we debated at Second Reading, even if many of the amendments are technical and there to tidy up. The Government really should have thought about this and got their act together before the Bill was published in the first place.

I know that the Minister is someone we can work with constructively on Bills—I appreciate that—but the Government’s incompetence over the weekend and the way this has been done challenge our ability to work together constructively. That is something else that disappoints me personally. As the noble Lord, Lord Fox, pointed out, it puts too much pressure on staff, who were expected to try to pull this Bill into shape over the weekend.

I reiterate completely what the noble Lord, Lord Fox, said about providing proper Explanatory Notes rather than annexe A, which was very thin on information and, in some cases, did not cover everything that the amendments were about. I spent most of the weekend trying to get my head around a lot of these amendments and cross-reference with the annexe. This is an important Bill and a lot of it is technical. I am not a procurement law expert, so I need support in the Explanatory Notes to understand exactly what is happening and what the amendments will do. When we are cross-referencing and trying to make sense of things, it is hard. As a member of the Opposition, let me say that this is not just about holding the Government to account; as I said, it is about working constructively to make legislation better. The Government have not helped us to do this.

My plea to the Minister is that we really need to move on from this and make sure that we can scrutinise Bills in a much better way. We are where we are with the Procurement Bill.

I totally understand and support what the noble Lord, Lord Fox, said about objecting to some of the amendments, because all this has been deeply unhelpful. Okay, we will do only three groups today, but at some point we have to get stuck in. It took me over two hours yesterday to go through all the amendments in group 1—group 2 has about three times that number. If we are going to do this properly, and actually look at the amendments rather than take the Government’s word on what is in them, it will be very time consuming.

I am afraid I am going to share with noble Lords some of what I did yesterday. It needs to be spelled out how complicated and confusing it is when we try to manage something such as this. Obviously, I started with group 1 and the proposed new Clause 1, which is about procurement and covered procurement. I read the amendment. I did not really understand what covered procurement it is, so I looked at section 5 of annexe A, which is just definitions; there is no further information. I still do not really understand the implications of changing this terminology. That is something we need to get across to the Government. We need to know exactly what is happening. This also has an impact on Amendments 55, 301, 405, 406, 408, 411, 416, 453 and 454. This affects many parts of the Bill, so we have to understand what is going on here.

I then looked at Amendment 172 to Clause 30, which would delete the word “procurement” and insert

“the award of a public contract”.

Apparently this is in annexe A, sections 3 and 8. Section 3 just says “replaces references to associated supply with associated person and expanding the concept”, but again, why? Why is that important? Why do we have to do that? Section 8 is about ensuring clarity on how a contracting authority must treat a supplier. Why do those changes do that? What is the purpose behind changing the terminology?

We have talked about the devolved Administrations. Amendments 282 to 285 to Clause 51 are about Northern Ireland. This is covered by sections 26 and 27 of annexe A, which say that “contract deal notices in respect of light-touch regime contracts must be published in 180 days.” Again, there is no proper explanation of how that affects Northern Ireland and what it means for the way it carries out procurement.

Moving on, I came to Amendments 342, 349, 356, 378, 380 and 383, which also refer to Northern Ireland, and Amendments 392 and 433, which refer to Wales. But the annexe also mentions Wales for the amendments that are supposed to be about just Northern Ireland, so it does not cover everything that the amendments say they do. I had had about four cups of coffee by this point just to try to keep going.

Amendments 377, 381, 385 and 387 would insert the word “was”, but the parts of the Bill they would amend already have the word “was”. Again, I am really confused about why we need another “was”.

Amendments 379, 382, 386 and 388 would insert

“as part of a procurement”.

If that is something that needed to be spelled out, I find it extraordinary that it was not written in in the first place.

Amendment 389 would delete subsection (10), which says:

“This section also does not apply to … defence and security contracts, or … private utilities.”


That is not tidying up or technical; it would delete a subsection that says something. I ask the Minister: what does that actually mean? What does it do? Why is that subsection being deleted? What is the purpose behind it?

Amendment 390 would delete a paragraph that reads,

“the value thresholds in subsection (2)”.

Again, it is not a tidying-up but a deletion. What does this actually mean? I am sure I am confusing everyone here because they do not have the Bill in the right places in front of them—I could read out the actual page numbers, if noble Lords want.

Amendment 391 would delete “in subsection (7)” on page 46, line 9. Why are those words being deleted? What is the purpose behind it?

Amendment 395—there are a lot like this—would delete “supplier” and add “person”. If this terminology was wrong, why was it not picked up so much earlier, when the Bill was being first drafted?

Amendment 424 would delete

“the award of a contract”

and insert “procurement”. Again, if that is the terminology that should have been used, why was it put in wrong in the first place?

In Amendment 425, “unless it is awarded” is to be deleted and “other than procurement” inserted. Those do not really seem the same to me, so what is the point of that change? What are the Government trying to do?

Amendment 426 would delete paragraph (c) on page 50, line 18:

“in relation to the management of such a contract.”

Why do we need paragraph (c) deleted? What is the purpose of it? Annexe A does not tell us any of this information.

Amendment 437 says:

“Page 53, line 3, leave out paragraphs (a) and (b)”.


Why are we deleting paragraphs (a) and (b)? What is the purpose and what are the consequences?

Amendment 438 says:

“Page 53, line 17, leave out ‘or services’ and insert ‘, services or works’”.


That seems the sort of thing that should have been drafted correctly in the first place.

Amendment 439 says:

“Page 53, line 26, leave out from ‘procurement’ to end of line 27”.


That is also the same in Amendment 462. Again, it looks to me like something that should have been done properly in the first place.

Amendment 440 says:

“Page 53, line 37, at end insert”,


and noble Lords can see the words on the Marshalled List—there is a lot there, and I really do not think that anyone wants me to read it all out. Again, this is not a technical adjustment but inserts quite a substantial amount of text. What are the implications? These may all be marvellous changes that benefit the Bill, but the point is that we do not know because we do not understand what is going on here.

Amendment 463 would delete subsection (8) on page 57, line 7. Amendments 439 and 462 do the same thing. What is the purpose of deleting subsection (8)?

I will not cover Amendment 528, because it has been moved to a different group. Noble Lords will be glad to know that I have only two left.

The annexe says that Amendment 540 is to define expressions. It inserts “covered procurement” and “debarment list”. What does “covered procurement” mean? Why does it reference the “debarment list”? That is similar to Amendments 542 and 543.

I will finish there. I just wanted to get across to the Committee and the Minister how very confusing this is and how little back-up information we have. We want to work constructively with the Minister. We want this to be a good Bill. For goodness’ sake, we just need to be able to get it sorted.

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[Lord True (Con)]

My Lords, I was going to make a proposal. The legislation obviously reflects our existing international obligations, including the TCA, but this is not the only definitional point that has been raised. I cannot find the others in my notes but the noble Lord, Lord Berkeley, for example, asked about a centralised procurement authority. A centralised procurement authority is a body that sets up procurement or purchasing arrangements for use by other contracting authorities; examples would be the Yorkshire Purchasing Organisation or the Crown Commercial Service. That is one definitional issue. The noble Lord asked about the meaning of “state” in Amendment 440. That refers to a country with which we have an international agreement.

It is regrettable that this should happen after we have had this debate. Having heard the strength of feeling expressed by your Lordships on these amendments, especially the definitional ones such as the definition of “covered procurement”, I will ask my officials to hold a technical briefing on these matters for interested Peers. I will ask for invitations to be sent out by my office after the debate, in the hope that some of these points can be clarified. I know that is not to the greatest convenience of your Lordships because the Committee is due to come back on Wednesday, but it should help further to explain the rationale and necessity for some of these late amendments, which were advised on us by our legal advisers. I or my office will be in touch with noble Lords who are here with that offer, so that we can undertake that.

I was asked by the noble Lord, Lord Purvis of Tweed, about the impact assessment. Again, we will reflect on that point but my advice, even in the light of these amendments, is that as there has been no change to the general policy intent of the Bill, there is therefore no change to the costs and benefits of the impact assessment. I am therefore not advised that it is necessary to revise it, but I will second-guess that advice in the light of the noble Lord’s contribution. Although there are wording changes, to take up what my noble friend Lord Lansley said, the general intent of the Bill remains the same.

On the question of the devolved Administrations—obviously, there is a particular issue at the moment in the case of the Northern Ireland Executive, which is why some of these matters are ongoing—I am grateful for what the noble Baroness, Lady Humphreys, and the noble Lord, Lord Wigley, said about the sense of co-operation. I believe that is reflected in both directions. I was asked whether all these things had yet been formally agreed. As I understand it, most of these amendments have been; some have been agreed and discussed at official level but may not technically have been signed off by Ministers. It is certainly our intention and, I believe, the Welsh Government’s intention that we will reach full and constructive agreement, which will enable the proposals to be recommended to the Senedd. This has been an area of good and striking co-operation. I say publicly to the Committee again how much we appreciate that, as I did in my opening remarks.

I hope I have briefly dealt with the question of “covered”, “not covered” and some of the other definitional things. I hope that the further formal briefing I have offered can be arranged at a convenient time for most Peers tomorrow, and will go some way to answering this. I give a commitment that, when we go forward, I will not accept to lay before your Lordships and take to a vote something where there is no proper explanation of the individual amendments in the manner that the noble Baroness opposite quite rightly asked for. There should be a clear explanatory statement. I will ask for that to be done in respect of the amendments that are coming forward to explain the whys and whats in detail, and how the various groups interlock. Again, I will not tell tales out of school, but one of the issues is that there are interconnections between these different groups and how they have been sliced. I repeat that commitment.

[Lord Fox (LD)]

I thank the Minister for that. I do not think he answered the question my noble friend asked. Accepting that government Amendment 1 will now be withdrawn, will the government amendments in this group, from Amendment 47 to Amendment 543, be retabled for us to have a proper debate on each of them? As the noble Baroness set out, there are a lot of questions around each of them, none of which have currently been addressed. I am unclear on the mechanism by which those amendments will be retabled. Can the Minister confirm that that will happen so that we can have a proper debate on those amendments?

[Lord True (Con)]

I will have to take procedural advice on that. My understanding is that if I withdraw Amendment 1 it is not the case that the group has been negatived and therefore that the other amendments do not lie on the Order Paper. The Government would obviously have preferred, despite all the justified criticisms—

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[Lord Moylan (Con)]

No, I am delighted. It adds much illumination.

[Lord Fox (LD)]

We can have more of you.

[Lord Moylan (Con)]

You could have more of me, my Lords, but I will simply say that I know nothing about ports. However, I know a little about airports and they are technically subject to economic regulation by the Civil Aviation Authority. It is true that that authority has, through its own risk assessment, decided that only Heathrow Airport will be subject to full economic regulation. Gatwick and Stansted are subject to some, while most other airports are not economically regulated; that is, they can set their own charges and if people do not want to fly into their airport, they will fly to another. It is not entirely true, it is fair to say, that where it matters airports are not economically regulated, because they are. I suppose that the Civil Aviation Authority could always reverse its decision, if it saw fit. It has the power to expand economic regulation to other airports if that were felt necessary. Having added that, I shall subside and look forward to my noble friend’s response.

[The Earl of Lytton (CB)]

My Lords, this is my first intervention on the Bill because on the day of Second Reading I was convalescing at home and not allowed to go anywhere.

On this business, regarding utilities, I am afraid I come at this from a simple property professional’s standpoint. It always used to be gas, water, electricity, drainage and telecoms; those were the utilities on which people relied for the use of buildings and property of all sorts. We seem to have dropped drainage, for reasons I cannot quite understand, when it is merely the dirty-water function of the clean-water provider of drinking water, which is referred to.

I declare my interest as one of those who serve under the chairmanship of the noble Baroness, Lady Neville-Rolfe, on the Built Environment Committee, as do the noble Lords, Lord Moylan and Lord Berkeley. I am very privileged to do that. Last week, when we were talking about the Product Security and Telecommunications Infrastructure Bill, it was noted that the very purpose of the telecoms giants was to try to convince government that they were a utility, should have utility powers and should, encompassed in that, have certain powers of coercion. They have come into that from the private sector, whereas dear old British Telecom, aka Openreach and a few other things, has come at it from the other direction—the hardwired traditional utility standpoint that was protected, with all sorts of powers to acquire wayleaves and so on.

The noble Baroness referred to imperfect policy development. I almost got up and said “Hear, hear” to that, because we need to start sorting out what exactly we mean by these utilities that look in lots of different directions. Some of them are very commercial—some are very controversial—and others come from a highly and necessarily regulated background because they are important for health, stability and all sorts of other basic things that require regulation as to quality and quantity in the essential needs of the public. It is not so much the voluntary needs, and perhaps even less the voluntary needs of business, but the essential needs of the public.

We seem to have an increasing muddle between what may be regarded as that essential element that has to be regulated for the purposes I have suggested and the wider commercial endeavour that goes with it. Because that distinction has been made ever less clear, for reasons that I perfectly understand—the utilities were privatised for reasons to do with funding, and I do not pass judgment on that—like Voltaire’s Candide I stand here noting both cause and effect. This is exactly the situation we are in; utility activities are mired in this very issue. I look forward very much to the Minister’s answer on that. He has a great grasp of these intellectual refinements, and I hope he will be able to enlighten us. I think a bit of a distinction needs to be made here between essential purposes and processes that are essentially voluntary and commercial.

[Lord Fox (LD)]

My Lords, I am sure the Minister will pick up on the noble Earl’s Voltaire reference and tell us that we live in the best of all possible worlds. In my previous intervention, I mentioned the Government’s productivity. The noble Lord, Lord Moylan, appears to be spoiling that, trying to do in two Bills what the Minister is trying to do in one. I think one Bill on this may be enough.

The point raised by the noble Lord on utilities, developed by the noble Earl, is extremely pertinent. It is a wider question that spreads into things such as the Building Safety Act, for example, where there is an assumption that utilities have a particular role to play. Are hardwiring, broadband and things such as that utilities or not? There are wider implications in this than simply the nature of the Bill. There are questions to be answered.

There is also a precedent already forming in the Bill about public services being carved out. That is the NHS issue, of course, where separate legislation is pulling out some aspects of the jurisdiction of this Bill. I do not expect to have that debate on this group, because the Minister has helped us to move everything into one group. We can have that debate later, but the principle of carving things out has been accepted by the Government. In that respect, the tablers of these amendments have something to go on. The interesting question they are providing through these amendments is: what is in and what is out? In a sense, that covers part of our curiosity around the Bill.

We should not be too obsessive about this, and nor should the noble Lord opposite, because Clause 109,

“Power to amend this Act in relation to private utilities”,

allows the Government to turn the whole thing upside down anyway. Clause 109(1) says:

“An appropriate authority may by regulations amend this Act for the purpose of reducing the regulation of private utilities under this Act.”


In fact, none of this debate makes any difference because, by regulation, the Government can ignore themselves in any case. We already have a problem, Houston.

The noble Lord talked about the difference between private delivery of services and the noble Baroness, Lady Neville-Rolfe, talked about the fact that these organisations took on risk. With the train operating companies, when the risk turned around they just surrendered their licences. It is not real risk in the sense we might understand it in the private sector; it is a different world.

For that reason, I find it very difficult to go along with the amendments that try to extract private delivery of public service from the Bill’s ambitions. Large sums of money that have, lest we forget, originated from the pockets of UK citizens in the form of tariffs, fares or subsidies are then disbursed, or potentially disbursed, by the private companies as they procure things to deliver from their private sector the public services they are pledged and allowed by licence to supply. The Bill may, as the noble Baroness, Lady Neville-Rolfe, set out, interfere with the board’s licence to operate on a wider scale when it decides how to go about making purchases, but that is not unreasonable, given that it has hitched its wagon to a public service. When capital enters the business of delivering a public service, in my view it sacrifices the true independence to operate that it would have if it delivered a private service to private individuals. That is the deal: business gets to ply its trade on the condition that government and usually a regulator, but not always, meddle with its business model. It is a condition to operate.

For this reason, I am very interested to hear how the Minister will respond to your Lordships’ questions. These have been very worthwhile amendments and I thank the tablers. I look forward to the Minister explaining, first, what a “public service” is, secondly, what a “utility” is and, thirdly, where they sit in the context of the Bill.

[Baroness Hayman of Ullock (Lab)]

My Lords, this has been an interesting debate. It has been interesting to listen to comments on this area, particularly from the noble Baroness, Lady Neville-Rolfe, and my noble friend Lord Berkeley in their introduction to their amendments. Clearly, the changes proposed could have huge implications for utilities. There was a greater amount of flexibility for utilities in the Utilities Contracts Regulations 2016 that this Bill loses. The Government have acknowledged that consolidating the UCR with the Public Contracts Regulations will be a major and complex legislative exercise. Considering the issues we debated earlier, I hope that this is an area where we can work together to make sure we get it right for everybody involved.

One of the things we have to be careful about is not increasing bureaucracy when at the heart of the Bill is the desire to speed up procurement processes. I will note a few things in the briefings I have had on the Bill. First, it is worth noting the international Agreement on Government Procurement, which is within the framework of the WTO. It establishes rules requiring that

“open, fair and transparent conditions of competition be ensured in government procurement.”

Although it does that, it does not require WTO members to implement procurement rules for the utilities sector.

Furthermore, as we have heard, the UK is no longer obliged under EU law to implement procurement rules for the utilities sector. The UK’s utilities sector is, of course, very different from those in many of its European counterparts. Therefore, using solutions that were originally designed for European markets may not be appropriate for the UK. We need to take note of all that.

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[Lord True (Con)]

My noble friend has very characteristically not only picked up an onion but begun to peel it into various levels of the commitment and nature of the activity. I will look into the particular issues in relation to buses referred to by the noble Lord, Lord Berkeley, and my noble friend Lord Moylan.

What I was going to say does not really amount to a peroration. Indeed, at this time, one does not really need a great peroration. What I am here to do is to listen. A range of very interesting and important points have been raised by noble Lords on all sides in relation to the operation of the legislation on private utilities. I will look carefully at Hansard and undertake to have discussions on these matters between now and Report. I am grateful to all noble Lords who have spoken—

[Lord Fox (LD)]

I sense that the Minister is winding. I have a quick question, which I think is best responded to by a letter. It is regarding international agreements and particularly telecoms, which were mentioned. The Australia agreement carves out specifically kit and hardware, but not telecom services, which appear to be left in. Will the Minister write to us about what the carve-out on broadband services is in, for example, the Australia trade deal and other trade deals?

[Lord True (Con)]

Yes, my Lords. I have committed to write in relation to that and I will pick up other questions that have been raised, including by the noble Lord. Obviously, there are existing international agreements that are, if you like, deposited, and which we have to work with, as well as issues of how we move forward case by case, but I will certainly address in a letter the point the noble Lord asks about. It is a legitimate question. The status of international agreements was also raised from the Front Bench opposite, and I will write to the noble Lord on that matter and copy it to colleagues in the Committee.

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[Baroness McIntosh of Pickering (Con)]

I am delighted to follow my noble friend with a few brief remarks. I say at the outset that I regret that I was unable to contribute to Second Reading. I shall limit my remarks today to my arguments probing why Clause 2 and Schedule 2 are part of the Bill. This raises a more general question as to why we actually need the Bill, as I understand that we are already in the GPA. We have had a number of Statements about this and discussions in this regard with the Minister responsible for trade, my noble friend Lord Grimstone. I would be grateful if my noble friend could elaborate on what I am about to put to him.

As I understand it, the purpose of the Bill is twofold: first, to reform the UK’s public procurement regime following our exit from the EU; and, secondly, to create a simpler, more transparent system that better meets the country’s needs rather than being based on transposed EU directives. I understand that we are to have a separate exercise where we go through all the retained EU law, when we come to what is euphemistically known as the Brexit freedoms Bill, to decide which of those retained EU directives we may wish to keep.

My understanding is that much of what is before us today, as my noble friend has explained, is already covered by the World Trade Organization Agreement on Government Procurement—the GPA, as it is called. The aim of that agreement is to mutually open government procurement markets to those party to that agreement. The threshold values are, curiously, almost identical to the thresholds that had to be met through our membership of the European Union, which was roughly €136,000. We are now looking at £138,760 as the threshold for the general agreements for goods; for services, it is the same amount and, for construction, it is £5 million-plus.

As my noble friend Lord Lansley rightly assumed, I am trying to ascertain through this debate the way in which public contracts can be defined. I am assisted in this regard by paragraph 16 of the Explanatory Notes, which sets out that:

“The Public Contracts Regulations 2015 will be repealed and new rules on procurement will be set out in the new regime. Most central government departments, their arms-length bodies and the wider public sector including local government, health authorities and schools will have to follow the procedures set out in the Bill in awarding a contract with a value above set thresholds to suppliers.”


If, for example, there is a public procurement contract for food, for vegetables and meat, for a local school, hospital, prison or some other public body, what is the procedure that will have to be followed after the adoption of the Bill and, more specifically, the regulations that will flow from it?

That is the specific question that I would like my noble friend the Minister to address. How will public procurement for contracts over the threshold be treated? For the purposes of the Act, will they be treated differently from those that already apply under the GPA? How will the contracts apply for those that are under the magic threshold of £138,760? In effect, will the same procedures apply as before we left the European Union? I am particularly interested in food, fruit and vegetables, for the reason that we were all told this was going to be a benefit—a Brexit dividend from leaving the European Union—but I am struggling to see how this dividend will be delivered in this regard. When these contracts are put out for tender, whether they are above or below the threshold, how will that procedure apply? Can those that are under the stated threshold be awarded to local suppliers without being put out for international tender, or could we have Spanish or, indeed, African companies applying to deliver these?

I admit to being confused, because we were told that this was something that would happen after we left the European Union, and I am still struggling to see how these contracts are going to happen. We were told that it would boost local growers in this country to have these contracts put out for tender once we were no longer in the European Union. I look forward, with great anticipation, to my noble friend the Minister’s reply.

[Lord Fox (LD)]

My Lords, up to her final couple of sentences, I was going to recommend that the Minister listen very closely to the advice from the noble Baroness, Lady Noakes. This group of amendments essentially carries on the theme of what is in and what is out, which is the existential theme of almost everything we are debating that is not a government amendment. In that respect again, it is a welcome set of amendments and I think, all joking aside, that the noble Baroness’s points are really important points for the Minister to clear up. I do not understand where we are on this and if the noble Baroness, Lady Noakes, does not then it probably is not understandable.

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[Lord True (Con)]

Again, my Lords, I am very grateful to all those who have spoken. There have been some interesting speeches. Indeed, I will certainly take the final speech by the noble Lord, Lord Coaker, in which he seemed to deplore the idea that the Government should have any regulatory powers, back to my right honourable friend. We will certainly watch for that as we go forward.

On his more general point in relation to the Delegated Powers Committee and so on, I do take what he said seriously. We will have a debate on that in the next session. I will look into his specific point about secondary and primary legislation. If there is an answer that is an advance on what is already in the public domain, I will certainly have that for the next session when we will look at delegated powers.

I am not really a fan of wide-ranging groups that cover a whole range of different subjects. They seem to have become the habit of our times. When I first had experience of your Lordships’ House, we had quite short debates on relatively narrow subjects, which enabled the Minister and the House generally to concentrate. So I will endeavour to answer all the various points that have been made but some of them may have to come in writing. We will look very carefully at Hansard because there was a very broad range of questions, which started with the questions on universities.

[Lord Fox (LD)]

Can I just point out that the grouping comes from the Government Whips’ Office? We could have extracted all our amendments, one by one, and created a larger number of groups but, probably in deference to the will of the Government, we did not. The future of how many amendments you have in a particular group lies very much in the hands of the Government, not Her Majesty’s loyal Opposition’s or ours.

[Lord True (Con)]

My Lords, they are negotiated in the usual channels. Sometimes it is a fatal thing in your Lordships’ House to express an opinion, in all respect to your Lordships, of how I think things may be done. We are all imperfect—I am sure the usual channels are not perfect—but having a large group does raise challenges in terms of accountability.

I will try to address the various points raised. I apologise if they were so broad that I may miss some of them, for whatever reason. We started on universities with Amendment 3 from my noble friend Lord Lansley. His amendment would exclude universities from a definition of public undertakings within the definition of a contracting authority, and consequently from the scope of the public procurement rules. He asked about public undertakings and public authorities. Public undertakings are relevant only in the context of the utilities that we were discussing. The universities will be public authorities if they meet the public authorities test, and not caught if they do not meet it.

Universities are included in the UK’s coverage commitments under the World Trade Organization’s Agreement on Government Procurement as contracting authorities that are subject to the rules, where they are publicly funded. The existing definition of a contracting authority in the Public Contracts Regulations 2015 contains tests of the extent to which a body is publicly funded or publicly controlled. These tests are then applied by the body in question to determine whether they are caught by the definition. The definition of a contracting authority in the Bill is intended to capture the same bodies. Universities are therefore in scope of the procurement rules, but only to the extent that they are mainly publicly funded or controlled. The position is likely to vary depending on universities’ funding streams, and those that derive the majority of their revenue from commercial activities would likely be out of scope.

Amendment 4 in the name of my noble friend Lady Noakes would adjust the definition of a contracting authority in such a way that bodies would be brought into scope where they are subject to control by a board if more than half the members are “capable of being” appointed by a contracting authority. I think there was some interest in that proposition on both sides of the Committee. Our initial feeling is that it would mean a more prescriptive and potentially wider scope than the proposed definition, which brings into scope only bodies controlled by a board that has been

“appointed by a … contracting authority.”

Again, the definition of contracting authority in the Bill is intended to capture the same bodies as in the existing Public Contracts Regulations. We are not seeking to change the scope of bodies covered in any way, though some adjustments have been necessary to replace references to European concepts such as bodies governed by public law with the more relevant UK analogous concept of bodies undertaking public functions. Ensuring consistency is necessary not only for practical continuity purposes but in respect of the United Kingdom’s international market access commitments in free trade agreements, which use the existing definition as the basis of the UK’s coverage offer.

The current definition brings into scope bodies that have a board more than half of whose members are appointed

“by the State, regional or local authorities, or by other bodies governed by public law”.

The definition in the Bill is consistent with this by bringing in bodies that are subject to the management or control of

“a board more than half … of which are appointed by a … contracting authority.”

The existing definition in the Public Contracts Regulations does not contain any reference, as per the proposed amendment, to the notion of board members “capable of being” appointed by a particular contracting authority. Whether or not an authority chooses to exercise its right to appoint members to a board is not addressed, and was not intended to be addressed, within the definition. For that reason, we do not currently consider that it would be appropriate to adjust the definition in the way the amendment suggests.

However, I have listened carefully to what my noble friend has suggested. We will consider further whether it is possible to exercise control without making appointments by the threat of control. For the moment I ask my noble friend not to move the amendment, which we cannot support as it stands.