Procurement Bill [HL]

Lord Hunt of Kings Heath Excerpts

2nd reading
Wednesday 25th May 2022 Lords Chamber

[Lord Hunt of Kings Heath (Lab)]

My Lords, it is a great pleasure to follow the noble and learned Lord, who showed how much more interesting a debate on a procurement Bill can be than we thought when we started out on this journey. I declare an interest as president of GS1 and of the Health Care Supply Association, and I pay tribute to NHS procurement officials for the fantastic work that they did during Covid.

Like most other noble Lords,I support the intent of the Bill to make public procurement quicker, simpler and more transparent. However, there is a balance to be struck. I take on board the comments of the noble Lord, Lord Maude, that outcome is more important than process, particularly in relation to the public sector’s poor record in supporting innovation and the perennial UK problem that we are a country great at innovation but very slow to adopt it, particularly in the public sector.

We must, however, have some process and tracking of what happens. We saw with Covid what happens when you do not have it. The PAC’s report readily acknowledged the challenge faced by the Government, but the failure to be transparent about decisions, publish contracts in a timely manner and maintain proper records left them open to accusations of cronyism and waste. Somehow, the Minister, through the passage of this Bill, must convince us that in moving to a quicker and more efficient system, proper process will continue while also allowing SMEs and innovative companies to take part and win tenders. The state of our economy suggests that unless we invest in innovation, we will be in very challenging times in the years ahead.

On defence, the noble Baroness, Lady Smith, made very trenchant points. Reading the PAC’s report this month on the MoD’s worrying inability to control costs was sobering. The report said that the MoD’s reliance on billions of pounds of future cost reductions to keep within its budget looks like a lot of trouble to come. It currently has no plans to support how these might be delivered and rising inflation will make pressure on affordability worse. The Government, however, are saying that they have done sufficient to ensure that our Armed Forces are in a state of preparedness for many of the challenges to come. That does not add up. The MoD has rejected the PAC’s general point, but I know who I would trust more in relation to defence contracts.

I principally wanted to mention the NHS, which the Minister kindly mentioned in his opening speech. We have just had the passage of what is now the Health and Care Act. There was quite a debate about procurement because that Act takes out the enforced tendering of clinical services from the Health and Social Care Act 2012. There is concern that in the Act there is now an all-catching clause which effectively gives the Secretary of State power, through regulations, to change the whole NHS procurement process. This was in anticipation of this Bill.

The noble Lord was very clear in his opening speech that this Bill is not going to be used to turn the clock back and allow for the tendering out of clinical services where it is not required to do so. It would be good to get his confirmation, and also for him to spell out what Clause 108 of this Bill means, which gives the power to Ministers, through regulations, to disapply provisions of this Bill in relation to procurement by the NHS in England. I hope that the two things go together, but it would be good to get some clarification.

I support what the noble Lord, Lord Alton, said very strongly. The noble Lord, Lord Stevens of Birmingham, has also mentioned this. In the Health and Care Act, there was an insertion of Section 81, which provides that:

“The Secretary of State must … make such provision … with a view to eradicating the use in the health service in England of goods or services that are tainted by slavery and human trafficking.”


Will this be replicated in this Bill? Does the Minister further accept—this was raised in the Answer on Xinjiang today—that this Bill should be amended to include at least a discretionary exclusion ground for companies closely associated with serious human rights abuses? I am sure there will be a number of amendments in this field, and past history would suggest that the Government would be advised to accept them, or at least accept the principle.

My final point, which a number of noble Lords have also made, is on the post-award contract management that the noble Lord, Lord Maude, talked about. The monitoring of public procurement contracts has been very poor. Many PFI deals were poorly procured. Many recent deals involving the use of private providers through centrally awarded contracts or frameworks have not proven to be good value for money. We seem to have in the public sector a bureaucratic edifice where huge energy goes into the agreement of a contract, but once that is done, people move on to looking at a new contract. Monitoring and managing the contract is simply not done effectively. In our meeting with the noble Lord, Lord True, a week ago, which was very helpful, he talked about his department, or the Government, engaging in development and training support programmes for procurement professionals, with a particular focus on contract management. That is very welcome. I ask the noble Lord, Lord True, whether that will be extended throughout the public sector. Although we are much concerned here with central government contracts, the principles must be enunciated throughout the public sector. In terms of value for money and for our future confidence in public procurement, it is essential that we up our game in relation to contract management.

Procurement Bill [HL]

Lord Hunt of Kings Heath Excerpts

Committee stage
Wednesday 6th July 2022 Grand Committee

This amendment would put into the Bill, as an essential stage in the preliminary steps to contracting for public services, consideration of the whole-life cost of procurement—in-house, outsourced or some form of mixed-economy model. I hope the Minister will accept it as something that would guide a future Government, of any complexion, and which should be included in the Bill.

[Lord Hunt of Kings Heath (Lab)]

My Lords, as this is my first intervention, I remind the Committee of my presidency of the Health Care Supply Association. I have Amendments 82, 92 and 141 in this group, none of which have much to do with each other, but that is part of the mysteries and delights of grouping.

Amendment 82 is particularly concerned with the challenges facing charities seeking to obtain contracts from public authorities. I am very grateful to NCVO and Lloyds Bank for their briefing on this matter. While all types and sizes of charities experience challenges relating to the commissioning and procurement of public service contracts, smaller organisations often face considerable barriers. Yet a large proportion of the voluntary sector is actually fundamental to the delivery of public services. There are many examples, but we know, for instance, that the voluntary sector is the leading provider of services—according to research commissioned by DCMS—in relation to homelessness, and there are many other services where we are absolutely reliant on the voluntary sector.

However, there is a real problem in the huge amount of work that needs to be done to assemble information and make bids. Advance notice of tender opportunities is important for charities. We know that many of them have far fewer resources than private companies to support bid-writing, so they need time to plan. They also want to take time to work with service users or other charities to develop an offer, and that cannot be rushed. When commissioning services for people, especially those experiencing a range of intersecting challenges, a market does not often exist, so preliminary market engagement is critical for understanding what people need and how those needs could be met.

All my amendment seeks to do is create a presumption that contracting authorities should have ample notice through a planned procurement notice, unless there is a very good reason not to do so. This would allow the necessary time, particularly for smaller charities, to prepare bids.

My Amendment 92 is about the need for rigour and accountability in procurement. It starts from the requirement set by Her Majesty’s Treasury to ensure that the investment of public money, especially large sums, is done objectively and in a way that those who have to authorise the investment can rely on. It also deals with the principle of transparency and would ensure that business cases are routinely published.

My understanding is that it is already required under Green Book guidance from Her Majesty’s Treasury, particularly for major projects managed in the government portfolio, that at least a summary of the business case has to be published within four months of contract award. The Green Book, which has been regularly updated by the Treasury as circumstances require, describes in great detail the rigorous process that needs to be followed. The principle is that if you do not abide by this, you will not get approval for the expenditure of resources. Much in the Green Book is based on the need for a proper business case and I believe it was also envisaged that the business case would be published.

The problem is that regulation and good practice are too often ignored in the public sector. I think athere is less appetite for proper enforcement of that guidance. All campaigners can do to raise concerns about a particular tender process is go for judicial review, which, as we all know, can be very expensive.

My particular interest is the NHS. When I was a Health Minister, which seems a very long time ago, there were very strict rules about spending and investment by trusts. If public money was sought for a major procurement or programme then a strong authorisation path led from region to department, and often to the Treasury itself. Some of that remains, but what is missing is that the former strategic health authorities ensured that the required processes were followed properly and intervened when they were not. They also ensured that the public were consulted, but much of that has foolishly been thrown away. That means that it has become much harder for the public to hold decision-makers to account.

It is very noticeable that, last month, the Public Accounts Committee published a report on the Department of Health’s 2020-21 annual report. It commented that the department

“has regularly failed to follow public spending rules and across the Departmental Group there is a track record of failing to comply with the requirements of Managing Public Money. The Department is required to obtain approval from the Treasury before committing to expenditure where such authority is needed. The Treasury has confirmed that £1.3 billion of the Department’s spending in 2020–21 did not have HM Treasury consent and was therefore ‘irregular’. The Treasury has stated that ‘in the vast majority of cases’ this was because either the Department and/or the NHS had spent funds without approval or in express breach of conditions.”

If the noble Baroness, Lady Noakes, was still in the position she held on financial management in the Department of Health, that would not be happening.

My amendment would ensure that there is a proper business case and that it should be publicly available before crucial decisions are taken. If the Minister says that it is already required, the fact is that parts of the public sector are not listening. I hope that this debate will be helpful in ensuring that the Treasury and government departments look at this very closely in the future.

My third amendment follows a briefing from the RNIB and concerns the fact that, in replacing the existing legislation, the Bill overwrites requirements that are of particular significance to 14 million disabled people in the UK because they ensure that publicly procured goods and services are accessible to everyone. It is pretty unclear at the moment how the current Bill will replace that regulatory framework, and my Amendment 141 seeks to re-establish a requirement that contracting authorities have due regard to accessibility criteria for disabled people.

In June last year several organisations, including the RNIB, wrote to the Cabinet Office seeking assurances that accessibility for disabled people would be maintained in public procurement legislation. Responding, the then Minister, the noble Lord, Lord Agnew—who has certainly shown how you should resign, in style and with full transparency and visibility to your Lordships’ House, although I do not think he quite managed the grace of the noble Lord, Lord True, in his very perceptive remarks yesterday—said that the Government are committed to ensuring that accessibility for disabled people is maintained as part of public procurement legislation, and that the new regime will ensure that specifications take into account accessibility criteria and design for all users. Despite that, the only reference we can find to accessibility is in Clause 87(2), which states that any electronic communications utilised as part of the public procurement exercise must be

“accessible to people with disabilities.”

This is partly probing—finding out the government response to it. If the Minister argues that the public sector equality duty under the Equality Act is sufficient, we will argue that it is not sufficient because we have seen contracting authorities failing to consider their obligations and procuring inaccessible products. This amendment is only a start, but I hope the Minister will be sympathetic to the issue.

[Lord Lansley (Con)]

My Lords, before I speak to my Amendments 84 and 88, I will just say that, while I do not think it is a registrable interest or a conflict of interests, my experience in these things is largely derived from my work, over a number of years now, advising LOW Associates SRL in Brussels, which has a number of contracts with the European Commission and other European agencies. We have participated in procurements on a number of occasions each year in the European context. That gives one quite a lot of experience of the system we are moving from and some of the ways it can be improved. I put that on the record.

My noble friend and other noble Lords may recall that at Second Reading the most important point I made—it is one I will return to on a number of occasions, including when we talk about the procurement objectives and the national procurement policy statement —is that procurement by the public sector is a very large element of economic activity. The way in which it is conducted can have a significant and beneficial impact on productivity in the economy if the issues of innovation are properly incorporated into the consideration of how procurement is undertaken and who the suppliers to public authorities are.

In a sense, the noble Baroness, Lady Worthington, is trying to do the same kinds of things in Amendments 85 and 87. We are maybe trying to approach it in slightly different ways. The same will be true in relation to the procurement objectives.

I hope that in responding to this debate my noble friend can at least give us a sense that we can work together to try to ensure that the promotion of innovation is one of the central aspects of how contracting authorities go about their process of delivering best value, and that the broader externalities of procurement, through promoting innovation in the economy, are realised. They are significant.

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Amendment 92 from the noble Lord, Lord Hunt of Kings Heath, seeks to insert a new clause to ensure that for any contract in excess of £1 million a business case is published at least 42 days in advance of a tender notice being published. Again, while we share the noble Lord’s drive towards greater transparency and have worked hard to deliver that, in our view this would create disproportionate burdens for contracting authorities that would outweigh the real-terms transparency benefits. While we would hope and expect that for contracts of that size, contracting authorities would have a clear business case, that is not the same as saying they should be published. Such documents may contain confidential commercial information that the contracting authority might need to keep private, or they might need a public interest test and redaction, which would add to the burden on the contracting authority. In our view, once the burden of publication is balanced against the benefits of the transparency of the data, there is no overall advantage to requiring publication, but I will reflect very carefully on what the noble Lord has said because in seeking to protect legitimate commercial interests, it may create work as well as opportunity: there is a balance there.

[Lord Hunt of Kings Heath (Lab)]

I am grateful to the noble Lord for considering my amendment. Does he accept part of my premise, which is that some public authorities are really not doing the right thing at the moment, despite Treasury rules and guidelines? In fact, the qualification the PAC made to the DH report is some evidence of that in relation to the NHS.

[Lord True (Con)]

My Lords, I could not possibly be tempted, particularly at 8.04 pm when the Committee needs to finish shortly and I already have a very long response to a large number of amendments. The Bill does have pipeline notices, which I have discussed: I will engage with the noble Lord on that before Report and I welcome that.

Amendment 141 is about a hugely important issue to which so many noble Lords spoke. The noble Baroness seeks to amend Clause 24 to require contracting authorities to take account of accessibility and design for all principles when drawing up their terms of procurement, except in duly justified circumstances. This is an issue of fundamental importance. It is of concern for disabled people, and I know that your Lordships hold concerns about accessibility very close to their hearts; it comes up in every piece of legislation.

As part of our broader goal of a simpler regulatory framework and increased flexibility to design efficient, commercial and market-focused competitions, the Bill does not dictate how terms of procurement including technical specifications are to be drawn up, which is the issue around Clause 24. It simply contains what is prohibited by international agreements and applies to all “terms of a procurement” as defined in Clause 24(5). We believe that this approach is better than the existing approach, as buyers are forced to truly analyse and develop the content of their specifications to address the needs of all those the public contract should support.

The UK has legal obligations, which we readily own and which will dictate how terms of procurement are drawn up, with accessibility covered by Section 149 of the Equality Act 2010, as mentioned by the noble Lord opposite. We consider that helps deliver the intended outcomes of both the current duties in this area contained in Regulation 42 of the Public Contracts Regulations 2015 and of this amendment.

I have heard the very strong speeches made by noble Lords on all sides, and I have seen the submissions from the RNIB and others. It is very important that we should have constructive discussion to test whether the Bill delivers the accessibility that your Lordships hope for. The Government remain absolutely committed to ensuring that public procurement drives better outcomes for disabled people. In our contention, there is no dilution of the commitment to accessibility under the Bill. The Government are clear that accessibility criteria should always be taken into account in every procurement, and the existing legislation ensures that that is the case.

However, we will engage further on this and on the other themes and points put forward by so many noble Lords in this wide-ranging debate. In those circumstances, I respectfully request that the amendments are withdrawn and not pressed.

Procurement Bill [HL]

Lord Hunt of Kings Heath Excerpts

Committee stage
Monday 11th July 2022 Grand Committee

[Baroness Thornton (Lab)]

My Lords, I shall speak to Amendment 47A in my name and Amendment 52. Basically, we believe that Clause 11 should include specific references to maximising social value as something that a contracting authority must have regard to in line with the social value Act and the national procurement policy strategy. The question to which I would appreciate an answer from the Minister is: why is that not included? In my previous contribution, I went through all the different policy streams—including levelling up—that lead us to the conclusion that social value and support for social enterprises and social businesses are a good, and they are good in procurement. It is therefore a mystery why this has been left out of the Bill. I hope the Minister will agree with that and, if not, explain to me why it is not the case. I hope he will support these amendments and add them in. They are modest amendments, really.

[Lord Hunt of Kings Heath (Lab)]

My Lords, I have Amendment 48, but I very much endorse my noble friend Lady Thornton’s remarks on this subject. In the group before last, it was interesting to hear the Minister talk about what I thought was a hierarchy in terms of the balance to be drawn in making judgments about procurement. He put value for money at the highest level. My major problem with that is that my experience in the public sector, mainly in the health service but in other worlds too, is that that is translated into the lowest price.

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[Lord True (Con)]

That is what the noble Lord said.

[Lord Hunt of Kings Heath (Lab)]

No, the noble Lord, Lord True, was interpreting what my noble friend said.

[Lord True (Con)]

I always like to use two words when either reduces to one.

[Lord Hunt of Kings Heath (Lab)]

I could get into trouble quoting the noble and learned Lord, Lord Judge, to himself on constitutional issues in the Schools Bill, but surely I can quote the noble Lord, Lord True, to himself. He interpreted my noble friend’s words of wisdom as a dangerous attempt by my party—the Labour Party—to constrain individual private companies that sought to provide public services to conform to the will of whatever its wishes in power might be. If only.

I think my noble friend was really saying—no doubt he will come back if he thinks I have got it wrong—that this Bill presents us with a unique opportunity to influence a huge public spend in the direction of policies that we wish to see implemented. In today’s environment, climate change and sustainability are essential. One way or another, this Bill will leave this House with some form of words on that in it, and I doubt very much whether the Government will be able to take them out, bearing in mind that this is a Lords starter.

[Baroness Worthington (CB)]

My Lords, I rise to speak to Amendments 49 and 58 in this group referring to Clause 11 on procurement objectives. I am very grateful for the support of the noble Baronesses, Lady Verma, Lady Young of Old Scone and Lady Parminter, on these amendments.

We have just had a very interesting debate about the need to support small and medium-sized businesses as a more explicit goal within the Bill. I am here on this group of amendments to make the case for more explicit support for future generations. We have a climate crisis on our hands. We are potentially facing temperatures of 43 degrees this weekend. This is not a pleasant situation to be in; it is going to cause people to die. This is not something we should turn away from, and we must future-proof every single piece of legislation that passes through the House during our watch. This Bill offers an opportunity for us to do just that. The Government have not introduced anything in the Bill that goes beyond guidance other than simply the words “public benefit”. This needs to be given much more clarity, and my amendments seek to do that.

It was stated at Second Reading, and I apologise for being unable to attend it, that we need to improve the existing drafting. Therefore, I am looking forward to hearing from the Minister and, I hope, to meeting the Minister as I have to echo the words of the noble Lord, Lord Hunt. It feels that there is a huge amount of cross-party support for being clearer in this Bill about our intentions and that somehow or other we need to see something more explicit in the Bill, so a meeting on this topic would be most welcome.

Amendment 49 seeks to add more specific targets and a list of matters that the contracting authority must have to regard to including the importance of contributing to targets on our carbon budgets, the natural environment, air quality and other matters. I do not think anybody here is wedded to precise wording, and a number of noble Lords have come forward with different wordings in this group. Obviously, this is not an amendment I would seek to make final, but there must be a form of wording we could all agree on.

We have talked at length about the opportunity the £300 billion per year spent on government procurement offers in terms of driving forward the agenda we wish to see and increasing Britain’s productivity, innovation and the diversity of the companies able to engage in the transition we need to see. Business as usual is no longer tenable. We need to drive change, and we know that procurement is a hugely important lever for doing that.

I asked some questions about precisely how much procurement is responsible for driving global carbon emissions, but I am told that that information cannot be given, so we have no way of knowing how well aligned government policy is to the achievement of these broader goal, which is regrettable. We want to see more clarity in the Bill so that we can, over time, know whether procurement is delivering on these multiple goals.

I am sure there will be responses from the Minister that call into question the sense of these amendments and suggest that somehow it would distort the hierarchy. I reassure the Minister that that is not what we are seeking to do. We are not trying to tie the hands but are simply trying to provide the clarity and direction for such an important lever. I am sure we will be told that the next clause on the national procurement policy statement should be relied upon to deliver this clarity. Yet—and we will debate this—there is not a requirement on the Government to produce a statement; it is simply a “may”. Also, there is no fixed timetable I can see about when that will be produced so, really, we have nothing. There are no reassurances at all that this very poorly defined concept of public benefit will be given more flesh and more detail.

There is a precedent for putting something in the Bill. I highlight Section 9 of the Health and Care Act 2022, on which this amendment is modelled, which amended the National Health Service Act 2006 to give similar duties to the NHS to have regard to climate change including in relation to procurement, so it is not incoherent or without precedent to put this in the Bill. It would be more consistent to have it in legislation. If we do not do it, people will say that it was done in the NHS Act and ask why it was not done in the broader framework Bill that came subsequently. There is well-established similar terminology in the Financial Services Act 2001 and the Skills and Post-16 Education Act 2022, so we must be consistent about the future-proofing of Bills to ensure that we are sending the right signals and bringing about this transition.

I hope I have explained why I think this approach should be taken. I highlight that public benefit being undefined is a problem, which brings me to Amendment 58. Of course it is legitimate for a Government not to seek to define every word in legislation, and some legislation can be unambiguously understood when the words have the ordinary meaning that you would find in a dictionary. The trouble with not defining a term that needs to be understood by all and for that meaning to be as consistently understood as it can be is that it will introduce a level of subjectivity and a lack of clarity. In a search through existing legislation, I have found no use or definition of public benefit, except in relation to charities law, but that cannot easily be read across into procurement decisions. Amendment 58 seeks to remedy that and to define it more clearly. It would include local priority outcomes as well as national ones.

I am sure the Minister will say that the understanding of public benefit will evolve over time and therefore a degree of a flexibility is required, but that is why we have selected only the issues which are enduring and which will be playing out of the long term. We have chosen three national and local priorities. Of course, that does not limit other priorities, but these will be enduring outcomes that will be with us for the long haul and will not change. The need to address the issues that we have highlighted here will get only greater. I think this amendment should be supported; I am not particularly wedded to this way of doing it, but there needs to be something in the Bill to provide the clarity that enables us to future-proof it. We need to take the current crisis and the responsibility we carry for future generations seriously in all legislation we consider, and I therefore look forward to the Minister’s response.

Procurement Bill [HL]

Lord Hunt of Kings Heath Excerpts

Committee stage
Wednesday 13th July 2022 Grand Committee

[The Minister of State, Cabinet Office (Lord True) (Con)]

I thank the noble Baroness and all those who spoke on this group on our previous day in Committee. It was obviously unfortunate that we could not finish this group then, but I am grateful to all noble Lords, including those who were here on Monday who are not able to be here today. It has been an interesting debate and I think that we will wrestle with the philosophy of this as we go forward. I have been interested in the contributions made.

I am constantly asked to define “public benefit”. One of the reasons why we have different political parties in this country and why politics has evolved is that, at different times, different people define it in different ways. The search for a total, accurate, 100% agreed definition that covers every possible eventuality may be an illusion. However, I understand that noble Lords are saying that they feel that there needs to be more clarity. No doubt we will continue this conversation on other amendments to come.

I was interested in this debate. As he knows, I have very considerable affection and enormous respect for the noble Lord, Lord Hunt of Kings Heath—it is very easy to say in this House that you have very considerable affection for somebody, because we are such a nice lot; I think generally we do mean it—and his experience. He said something very interesting. Having argued for his amendment, he said that this Bill would finish with something akin to what he wanted in it and that it would do that because it was a Lords starter.

The only way to interpret that is that the noble Lord would advocate using the power of the House of Lords to force the elected Government to include something in a Bill that they did not wish to include, in their judgment and in the judgment of the House of Commons. That is a perfectly legitimate point of view, but I was interested to see that the noble Baroness from the Labour Front Bench had signed that, as she just reminded us, and expressed her support for what the noble Lord, Lord Hunt, had said. Perhaps I should take this away and tell my friends that if ever there is a Labour Government, it would be reasonable for the unelected House to hold up Labour legislation indefinitely on a Lords starter in order to force change.

[Lord Hunt of Kings Heath (Lab)]

My Lords, he really cannot get away with that. There are huge numbers of different amendments, which all have the same intention of trying to implement the Government’s policies on climate change and sustainability, which, as the Committee on Climate Change has said, are absolutely fine. The Government’s problem is that they do not have the policies to implement their own strategy. All I am trying to do is to help them implement their strategy. I do not think that that is a great constitutional abrogation by your Lordships’ House. This is a Lords starter, the Government chose to bring it to the House of Lords, the Parliament Act does not apply and it is quite reasonable for this Committee—of course, I cannot speak for my Front Bench; I am speaking entirely as a lowly Back-Bencher—who is seeking to encourage the Government to recognise that they will lose this in this Committee and that the leverage they have to respond is less than it might be.

[Lord True (Con)]

My Lords, I think that was the noble Lord trying to wriggle off the hook but impaling himself back on it at the end of his remarks. We have to make this House work via the usual channels, and it is reasonable for an elected Government in another place to listen respectfully to the other House, which it should—it is our duty to ask the other House to think again on certain things—but there is a point where we do not say that it should be taken to the wire. However, if I am ever a Back-Bencher and there is something from a Labour Government that I do not like, perhaps I will take away the Hunt dictum—one of the advantages of continuing on Wednesday what you did on Monday is that you can read Hansard, and I read carefully what the noble Lord said—and practise what he preaches. Anyway, let us get on with the business at hand. It is an important issue on which the Front Bench opposite might wish to reflect.

Amendment 45, tabled by the noble Lord, Lord Wallace, and the noble Baroness, Lady Bennett, seeks to ensure that contracting authorities consider a number of additional requirements when carrying out procurements, including reducing net carbon budgets, supplier human rights records, data security in the platform, and transparency. In our view, as I have argued before in Committee, contracting authorities are able to deal with these matters as things stand, and in a way that is more targeted and effective than through inclusion in a broad obligation to “have regard”. In a sense, that is the difference between us. Although the noble Lord, Lord Wallace, said that his were modest demands, and deliberately did not include net zero, for example, that is brought in by the analogous amendment tabled by the noble Baroness, Lady Worthington.

Contracting authorities will be able to take account of suppliers’ carbon-reduction plans and other environmental objectives where they are relevant to the subject matter of the contract. It is unnecessary and potentially unhelpful to contracting authorities to attempt to impose on them all an obligation to have regard to a range of other factors, including net zero—as mentioned in the amendment tabled by the noble Baroness, Lady Worthington—in and throughout all of their procurement activities.

In particular, it places unnecessary burdens on them in relation to areas where this is of limited relevance and would open up smaller contractors unnecessarily to the risk of legal challenge. After all, these matters are also covered in another legislation. Contracting authorities will need—this is in the Bill—to consider the ethical and human rights record of the supplier, in some respects, when considering whether a supplier is eligible to participate in the procurement. We will discuss this issue later. The Bill contains effective provision on the exclusion and debarment of those who do not.

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[Lord Aberdare (CB)]

My Lords, I have Amendment 71 in this group, which is a simple probing amendment seeking to understand why the Bill exempts contracting authorities from having regard to the national procurement policy statement for contracts involving frameworks or dynamic markets. I can find no explanation, in the Bill’s Explanatory Notes or elsewhere, why such arrangements should not be covered by the terms of the national policy statement, but perhaps the Minister will be able to give a simple answer.

A large number of construction-related public projects will be procured through frameworks and dynamic market contracts. A framework is an agreement with suppliers to establish terms governing contracts that may be awarded during the life of the agreement. The Government themselves acknowledge in the Cabinet Office’s Construction Playbook that framework agreements, as a means of longer-term strategic collaboration in construction, can provide the best medium through which procurement and contracting can deliver transformational improvements.

Last December, the Cabinet Office also published Constructing the Gold Standard: An Independent Review of Public Sector Construction Frameworks, based on an independent and objective review commissioned from Professor David Mosey of King’s College London. To quote the then Cabinet Office Minister:

“This review recognises the potential of frameworks as a powerful engine-room for implementing Construction Playbook policies that include strategic planning, integrated teams, continuous improvement and the delivery of better, safer, faster and greener project outcomes.”


The review states that the Civil Engineering Contractors Association

“identifies over 1,660 public sector construction frameworks procured between 2015 and 2019 with an aggregate value of up to £220 billion.”

Given that the national procurement policy statement will seek to define strategic priorities and set the parameters for better public procurement in line, I hope, with the gold standard prescribed by the review, why should contracting authorities be exempt from having regard to it in agreeing the terms of frameworks?

A similar question arises in relation to dynamic markets. At Second Reading, the Minister stated:

“The new concept of dynamic markets … is intended to provide greater opportunity for SMEs to join and win work in the course of a contracting period.”—[Official Report, 25/5/22; col. 929.]


Again, it is not clear to me why the terms of the national procurement policy statement should not also apply to dynamic markets—although I am quite prepared to believe that I may be missing something.

[Lord Hunt of Kings Heath (Lab)]

My Lords, I have several amendments in this group: Amendments 69, 70, 76 and 79. It was interesting to hear the comments from the noble Baroness, Lady Boycott, about hospital food. She may not know that I am president of the Hospital Caterers Association. I must come to its rescue: it does a fantastic job, given the budget it is given. What she may not know is that in the Health and Care Act there is a section which mandates Ministers to set standards for hospital food, following the hospital food review. The issue will be whether there is enough resource with which to fund the standards that Ministers will set. As part of this Bill, the noble Baroness might like to look at amending the Health and Care Act to ensure that there is consistency of approach, because she has made a very important point indeed.

We are continuing this debate about the relationship between the Bill and sustainability and environmental outcomes, and the Minister has been responding. His first response was at Second Reading, when he accepted that the Bill does not include any specific provisions on the target to achieve net-zero carbon emissions by 2050, but he went on to say that contracting authorities will be required to have regard to national and local priorities, as set out in the national procurement policy statement.

The problem is that the existing national procurement policy statement, published in June last year, is full of ambiguity. If I were a procurement director, I would find it very difficult to find my way through all these objectives, some of which are in a tension with each other. I think the Minister’s response will be, “Ah, but that’s the flexibility we want to give to public bodies to make their decisions themselves”. The problem is that in translating that you still come back to the point that the Government are not, at the end of the day, prepared to use procurement sufficiently to ensure the implementation of their sustainability and environmental policies.

Paragraph 10 of the national procurement policy statement sets out:

“Contracting authorities should have regard to the following national priorities in exercising their functions relating to procurement. The national priorities relate to social value; commercial and procurement delivery; and skills and capability for procurement.”


Additionally:

“All contracting authorities should consider the following national priority outcomes alongside any additional local priorities in their procurement activities: creating new businesses, new jobs and new skills; tackling climate change and reducing waste, and improving supplier diversity, innovation and resilience.”


Paragraph 11states:

“Achieving value for money in public procurement remains focused on securing from contractors the best mix of quality and effectiveness to deliver the requirements of the contract, for the least outlay over the period of use of the goods or services bought. But the Government wants to send a clear message that commercial and procurement teams across the public sector do not have to select the lowest price bid, and that in setting the procurement strategy, drafting the contract terms and evaluating tenders they can and should take a broad view of value or money that includes the improvement of social welfare or wellbeing, referred to in HM Treasury’s Green Book as social value.”


Paragraph 12 states that the award criteria can be incorporated

“for comparing final bids and scoring their relative quality, to encourage ways of working and operational delivery that achieve social, economic and environmental benefits”.

This includes tackling climate change and reducing waste; contributing to the UK Government’s legally binding target to reduce greenhouse gas emissions to net zero by 2050; reducing waste, improving resource efficiency and contributing to the move towards a circular economy; and identifying and prioritising opportunities in sustainable procurement to deliver additional environmental benefits, for example enhanced biodiversity, through the delivery of the contract.

Paragraph 13 makes it clear:

“Public procurement should be leveraged to support priority national and local outcomes for the public benefit. This Statement sets out the national priorities that all contracting authorities should have regard to in their procurement where it is relevant to the subject matter of the contract and it is proportionate to do so”.


But here is the rub. Paragraph 15 states:

“Taking additional social value benefits into account effectively is a balance with delivery of the core purpose of the contract. Contracting authorities should ensure that they do not ‘gold-plate’ contracts with additional requirements which could be met more easily and for better value outside of the contract compliance process, particularly where legislation has already determined that such provisions do not apply, for example by imposing requirements in the Equality Act 2010 on the private sector that are only meant to apply to the public sector”.


Paragraph 14 says:

“There should be a clear link from the development of strategies and business cases for programmes and projects through to procurement specifications and the assessment of quality when awarding contracts. This is in line with Green Book guidance which makes it clear that the procurement specification should come from the strategic and economic dimensions of a project’s business case, and that commercial experts should be involved in the development of the business case from the start”.


The question I would ask is this: if you were a finance director or a procurement director in the public sector, what would you make of it? One has to see this in the context of having been through a decade—in fact, longer than a decade—of austerity where short-term fixes are much more common than longer-term sustainability investments.

I turn to the NHS, where I have some experience, and where I could certainly point to some really good examples of sustainability policies. In theory the intent in the Bill, as I see it, is to place greater emphasis on wider value than lowest price. But what this ignores, certainly in the NHS context, is the financial and economic reality that exists on a day-by-day basis. In an environment where savings are demanded in-year and budgets set annually, the overpowering financial incentive is to achieve cost improvement programmes. These savings filter down through the NHS financial system and become a target for finance directors and procurement directors who generally report to the finance director. While I am sure that if we had some finance directors in front of us, they would say that they strive to focus on long-term value, this requires a less tangible and measurable saving than the fact that product A costs less than product B.

In an NHS environment that is financially driven, targeted and appraised for striving to deliver savings targets in-year, and where the most measurable saving is lowest price, it is clearly going to be challenging to move away from that. This experience is probably reflected across much of the public sector; indeed, other parts of the public sector would probably say that the NHS has had it easier. Those of us in the NHS would of course say, “That’s because we need more money”, but the fact is that if the NHS is finding it difficult, other sectors are going to find it very difficult indeed.

My amendments are simply aimed at seeing sustainable development principles incorporated within the national procurement policy statement and the Wales procurement policy statement. At the end of the day, there really is an issue here, is there not? Whatever procurement policy is set out, public authorities will have challenging decisions to make. My own view is that, because of the way in which this has been put together, and potential future national procurement policy statements, public bodies are going to be left with very ambiguous statements where they do not quite know what they are expected to do. The Minister says, “Ah, but that’s flexibility”. I say that it undermines the wider goals towards which our procurement policy should be driven.

--- Later in debate ---

[Lord Scriven (LD)]

My Lords, this has become a fascinating discussion, particularly when linked to the previous group on Clause 11, as my noble friend Lord Wallace of Saltaire said. I rise to support what I think is the most important amendment in this group: Amendment 60, tabled by the noble Lord, Lord Lansley. If the wording is “may” rather than “must”, all the subsequent amendments are irrelevant, because the Government do not have to produce a national procurement policy statement.

We need to press the Government further on the framework, beyond the four issues in Clause 11, that needs to be laid down in this statement because very few people, if any—particularly not the Minister—have discussed this from the perspective of business and those who will be making significant investments in contracts to try to ensure that public value is delivered. They take signals over the medium to long term about where to invest. These signals are really important in terms of business planning and those businesses being able to make long-term commitments to the public sector.

Both Ministers keep coming back to saying that things are in different parts of different legislation in different parts of government. We have been told that the whole purpose of this Bill is to make public procurement simple, particularly for small to medium-sized enterprises. I do not know many small to medium-sized enterprises that have a department that can wade through different public sector Bills to work out what the signals are and what the company needs to do to make secure, good bids for public sector procurement. If the Government are minded not to amend Clause 11, they have to write a very detailed outframe of the national procurement policy statement to make those signals so business can make the right decisions—

[Lord Hunt of Kings Heath (Lab)]

Does the noble Lord accept that you need to do that as much for procurement directors as for the businesses? With his experience of the NHS, how does he analyse what the current procurement statement actually means? I think it is very confusing.

[Lord Scriven (LD)]

I particularly did not use the prism of public sector procurement professions, because I thought that the noble Lord, Lord Hunt, had already made the case for the NHS, and others had made it for different government departments and professionals. I was trying to point out that there is a different aspect to this. This is about helping business by making it simpler for it to get involved in procurement, particularly small to medium-sized enterprises. That is the Government’s desired aim. A lack of detail in Clause 11, along with the fact that the national procurement strategy statement may not be done, makes that really difficult for business.

I come back to the view that everything here helps not just procurement professionals and government but businesses, particularly small to medium-sized enterprises, to be successful. It is really important that the Bill contains a co-ordinated and codified approach to the Government’s strategy on public sector procurement, and that it is not left to myriad different policies and Bills, for the sake of business being able to negotiate and navigate what is at the moment the very complicated field of public sector procurement. If the Government do not take up many of the amendments about the environment, food and social value, I assure the Committee that their aim to simplify public sector procurement, particularly for small and medium-sized enterprises, will not happen.

--- Later in debate ---

[Lord True (Con)]

As so often, the noble Lord makes an important point. I was charmed by one aspect of his arguments on continuity, when he complained that the Conservative Party kept changing Prime Ministers. I thought he was one of the main cheerleaders for a change in Prime Minister, so he cannot, in the immortal phrase, have his cake and eat it.

There is a duty in the Bill as drafted for a Minister of the Crown to keep the national procurement policy statement under review. It is not in the Bill—noble Lords have not been particularly receptive to the argument I put forward, although the noble Lord, Lord Coaker, has shown his eagerness to get his hands on the levers of power and use them—but the Government’s intention, with great generosity, is that it should be possible for a review of the NPPS to be undertaken in each Parliament. If one made a period of eight years or whatever statutory, then a new or different Government coming in would have to task primary legislation to make that change. That is the kind of structure we have been trying to operate in. Part of the reason the Bill has been framed in the way it has is to leave flexibilities, some of which your Lordships do not like and some of which at least one of your Lordships does.

I turn to Amendment—

[Lord Hunt of Kings Heath (Lab)]

The Government have put some objectives into legislation, such as the climate change targets. What we are saying is, for goodness’ sake, where that happens, link this Bill to the other pieces of legislation. Surely it all fits together then.

[Baroness Worthington (CB)]

I remember well when we were debating the then Climate Change Bill how important it was to include a list of conditions that needed to be taken into account when setting the climate change budgets, including economic competitiveness and all sorts of other things. All we are asking for here is to have a reciprocating set of policies to ensure that the same things happen the other way around. I do not mean to be provocative, but there is a purpose for having a Government, and it sometimes feels as if the people in government do not really want to be there. If you are in government, you have levers, so use them.

Procurement Bill [HL]

Lord Hunt of Kings Heath Excerpts

Committee stage
Monday 18th July 2022 Grand Committee

[Lord True (Con)]

My Lords, here I pay the penalty for the discussion we had before the Committee started: there are more government amendments that I must move in this group. I will beg to move a range of amendments today.

Government Amendments 90 and 91 make improvements to preliminary market engagement notices. Together they ensure that, where a contracting authority chooses not to publish a preliminary market engagement notice, a justification must be set out in any subsequent tender notice. I know this will be welcomed, particularly by small businesses, which often rely on early market engagement.

Government Amendment 277 makes provision for contract details notices. It removes a superfluous reference to contracts awarded under this part, which is unnecessary as the definition of a public contract in Clause 2 covers that which needs to be covered.

Government Amendments 278 to 281 correct a timing error in relation to the publication of a contract details notice for a light-touch contract. This will ensure that the contract details notice is published first, within 120 days of entering into the contract. The publication of the contract is required within 180 days of entering into it, allowing time for the contracting authority to make any necessary redactions before publication.

Government Amendments 282 to 286 are at the request of Northern Ireland and exclude transferred Northern Ireland authorities from the obligation to publish contracts above £2 million.

Government Amendment 287 is a minor drafting change, which better reflects the operation of the provisions.

Amendments 355, 356, 357 and 359 make changes to the requirements in Clauses 64 and 65 for contracting authorities to publish information about, respectively, compliance with the prompt payment obligation in Clause 63 and payments made under public contracts. Northern Ireland has chosen to derogate from both those requirements, so these amendments reflect that policy.

Government Amendment 358 makes it clear that the exemption for utilities in Clause 65(4)(a) applies to private utilities only. Government Amendment 403 clarifies that user-choice contracts which are directly awarded are not subject to the requirement to publish a contract termination notice.

Government Amendments 429 and 430 are technical amendments to Clause 79 to reflect consistent drafting practice and the fact that Northern Ireland has chosen to derogate from the below-threshold rules in Part 6 and so does not require the threshold-altering power in subsection (7).

Government Amendments 446 and 447 to Clause 84 also relate to Northern Ireland. Northern Ireland has chosen to derogate from the requirement for its contracting authorities to publish pipeline notices.

Government Amendment 457 inserts a new clause entitled “Data protection” after Clause 88. This is a now standard legislative provision that reiterates the need for those processing personal data under this Bill to comply with existing data protection legislation. As we discussed on an earlier group, I look forward to engagement with noble Lords opposite on issues of particular concern relating to processing and holding data. I beg to move.

[Lord Hunt of Kings Heath (Lab)]

My Lords, I have Amendment 445 in this group. This amendment is concerned with the challenge facing charities seeking to obtain contracts from public authorities. The Bill is ambitious in its aim to simplify procurement rules, which is very welcome, but it is important that it is done in a way which does not make it more difficult for small businesses and particularly charities successfully to bid for contracts.

We know from past experience with current contracting rules and law that charities experience some barriers here. I hope that in our discussions on the Procurement Bill it will be recognised that a large proportion of the voluntary sector is pretty fundamental to the delivery of public services—indeed, in some cases the voluntary sector is the leading provider of such services. For example, according to research commissioned by DCMS, voluntary and charitable organisations and social enterprises won 69% of the total value of contracts awarded for homeless services between April 2016 and March 2020, and 66% of the total value of contracts to support victims of domestic violence and sexual abuse.

We know that the voluntary sector can produce outstanding results; we know about its ability to build trusting and long-term relationships with communities that are often excluded, its focus on prevention, its versatility and its agility. So I welcome the requirement for contracting authorities to publish pipeline notices—the Minister referred to this in relation to one of his amendments today—but, given the utility of such notices for smaller providers and the market diversity and improved services that could be cultivated by giving smaller providers a chance to prepare the bid, we want transparency to be prioritised in the requirements to publish pipeline notices; hence my amendment.

My Amendment 449 is slightly different but it none the less raises issues in relation to the way in which public authorities engage with the private sector—or the independent sector, depending on how you look at it. This amendment arises from concerns that public bodies are failing to act within the spirit if not the letter of the freedom of information legislation in relation to procurement contracts.

I just want to refer the Minister to an openDemocracy report, published last year, which looked at the operation of the Freedom of Information Act in 2020. It found that

“2020 was the worst year on record for Freedom of Information Act transparency … Official statistics published by the Cabinet Office show that just 41% of FOI requests to central government departments and agencies were granted in full in 2020—the lowest proportion since records began in 2005 … The Cabinet Office is blocking requests from MPs about its use of public money to conduct political research … Stonewalling, a brutally effective tactic for evading FOI, is increasingly prevalent … Government departments are cynically exploiting a legal loophole to deny timely access to information in the name of the ‘public interest’ … Government departments are failing to comply with a legal requirement to work constructively with requesters”.

The FoI Act was meant to be a safety net for members of the public so that there would be as much openness as possible. However, there are two obstacles to that happening. The first is the operational aspect of policing the Act through the Information Commissioner. The commissioner has been seriously affected by huge cost-cutting. Last November, Elizabeth Denham, the former commissioner, told the House of Commons Public Administration and Constitutional Affairs Committee that the ICO’s resources were “40% less” than in 2010 while, at the same time, the number of requests had increased by one-third. In its most recent annual report, published in July 2021, the ICO noted that there had been a build-up of the caseload over the financial year.

The other obstacle to the public being able to find out what is going on is the subject of my amendment. One exemption in FoI legislation relates to commercial interests in Section 43(2). This is a qualified exemption subject to the public interest test. Its application ought to be straightforward but, unfortunately, it is used regularly to refuse information in often the most absurd situations. The outgoing commissioner said:

“The reality of the delivery of Government services involves so much of the private sector now. The scope of the Act does not … cover private sector businesses that are delivering public services. I think that is a huge challenge. I have seen statistics that say up to 30% of public services are delivered under private sector contracts, but those bodies are not subject to”


FoI legislation.

I am afraid that the NHS is a frequent offender when it comes to this. We know that, over the years, the Government and the NHS have looked to expand private sector involvement. There is a long-established trend of trying to outsource some NHS functions to private contractors and a recent trend to set up what I can only describe as tax-dodging subcos, as they are called, to avoid VAT payments and reduce staff’s terms and conditions. This is where public health bodies set up their own subsidiary companies and transfer staff over. Basically, they do it to get around VAT payments, but we have also seen them use it to reduce the terms and conditions of the staff who are so employed.

What is so objectionable is that trusts frequently refuse to disclose information about what they are doing. Decisions are made in secret. In one example, an FoI request went in for the business case. In the decision-making record, the request was turned down on the basis of commercial confidentiality. This happens up and down the country. Section 42(2) is also used to refuse to disclose information long after any commercial considerations have gone.

This is a serious issue. As members of the public, we have a right to know when the NHS outsources services. The FoI legislation was never envisaged as getting in the way of transparency in those cases. When you combine it with the enforcement problem that we have, in essence we are seeing the FoI legislation not being effective. I am not sure how hopeful I am, but I am ever hopeful that the Government will see the error of their ways in relation to FoI. It was set up with the best of intentions and its principles still stand today in terms of transparency, but the more we see the public sector using the private sector, the more FoI considerations ought to come into play.

Procurement Bill [HL]

Lord Hunt of Kings Heath Excerpts

Committee stage
Monday 24th October 2022 Grand Committee

Moved by

[Lord Hunt of Kings Heath]

177: Clause 30, page 19, line 24, at end insert—
“(aa) failing, in the case of a supplier with two or more enterprises that are resident for tax purposes in two different jurisdictions with a group turnover of more than €750m, to provide a copy of a tax report which meets the requirements of the Global Reporting Initiative Tax Standard;(ab) failing, in the case of a supplier that is currently under investigation for tax offences in the United Kingdom or abroad, or where the company has reached a settlement with a tax authority following an investigation for a tax offence, to disclose details of the investigation;(ac) failing, in the case of a supplier which has a group turnover of less than €750m, to disclose that the supplier—(i) is based in a tax haven, or(ii) is a subsidiary of a person based in a tax haven, or(iii) has a subsidiary based in a tax haven.”Member’s explanatory statement
This amendment seeks to ensure that a supplier must be treated as an excluded supplier if it does not: report its economic activities in each country where they operate and the taxes paid in each country; report details of any tax investigations; and report where it is based in a tax haven or is a subsidiary of a person based in a tax haven.

[Lord Hunt of Kings Heath (Lab)]

My Lords, I shall speak also to Amendment 180. It seems a long time since we were in Grand Committee debating the Bill: quite a lot of things have happened since. I am sure the Committee would wish me to welcome the noble Baroness, Lady Neville-Rolfe, to her position. I wish her a degree of permanence—at least until the next election. Of course, she still has some amendments in her name to come. I know we may have debated them, but it is her opportunity to re-educate her department and come back with rather more robust responses than she received from the noble Lord, Lord True, although I express my thanks to the noble Lord for his stewardship of the Bill and his willingness to engage in debate with your Lordships on this important legislation.

I move on to my amendment. A few months ago, the Centre for International Corporate Tax Responsibility and Research and TaxWatch published a report on Amazon’s most profitable segment, its cloud computing business, which they argue is increasingly indirectly supported by taxpayers through hundreds of billions of dollars and pounds in government contracts around the world. In the UK, it said that Amazon’s cloud computing business won almost £600 million in government contracts between 2018 and 2021. It also highlighted that in 2020 Amazon signed a master agreement which allows it to treat all UK central government agencies as one client, which will further increase the volume of its UK contracts.

Despite Amazon collecting public money through large and rapidly growing government IT contracts, the tax payments of this company remain opaque. Indeed, a 2021 research report into Amazon’s tax practice shows that only a fraction of the company’s UK sales are accounted for in its UK accounts. Sales in the UK and elsewhere appear to be channelled through subsidiaries in Luxembourg and, although Amazon says that UK revenues recognised in Luxembourg are reported to HMRC, there is no public accountability as Luxembourg accounts do not disclose how much tax, if any, the company is paying in the UK. Amazon’s practices are replicated by many multinational companies, and the aim of my amendment is to press the Government to use the Bill to start to take some action. The Bill offers a chance to ensure an increase in transparency around the tax affairs of potential suppliers of government contracts. It also offers the opportunity to ensure the exclusion of companies that have engaged or are engaging in egregious tax abuse.

Tax non-compliance has been a potential ground for exclusion from government contracts for some time. In 2013, the Cabinet Office issued Action Note 06/13, which sought to ensure that companies bidding for government contracts declared any tax non-compliance in the procurement process, but this has had no effect whatever. Following FOIs to more than 40 government departments by the think tank TaxWatch, not a single incidence of the supplier being excluded was reported. It was also clear that very little compliance monitoring was occurring. The majority of departments responded saying that there were no incidents reported, but not every department even provided that response; some said they were unable to answer as it would take too long to respond. Will the Minister tell me why departments are so weak in holding these companies to account?

The Bill currently includes misconduct in relation to tax as a mandatory exclusion ground in Schedule 6, Part 2, but mandatory exclusion grounds do not mean that the supplier must be excluded from a procurement competition. A supplier becomes an excluded supplier only if it qualifies for a mandatory exclusion ground and

“the circumstances giving rise to the application of the exclusion ground are likely to occur again”.

The legislation also covers participation in defeated avoidance schemes. The mandatory exclusion ground covering defeated tax avoidance schemes includes instances where a tax return has been amended due to the participation of the taxpayer in a tax avoidance scheme and where the taxpayer has reached a settlement with HMRC, in which case there is no need for the person to receive an adverse judgment in a tax tribunal. When it comes to individuals and companies that have engaged in tax avoidance, the provisions of the Bill are wide-ranging but mandatory exclusion grounds apply only where there has been an assessment by HMRC. That assessment is final, meaning that any appeal rights have been exhausted.

We know that tax litigation is often complex and sometimes takes an exceptionally long time to wind its way through the justice system. When it comes to large companies, including the multinationals, it is common practice for the tax authority to settle tax disputes without penalties being charged.

We know that major companies—Amazon, Google and General Electric—have been investigated in recent years by authorities around the world for committing serious tax offences, but in each instance they have settled rather than admitting guilt and receiving full penalties. As such, none of these companies is barred from procuring government contracts and, with that, taxpayer money. The exact terms of these settlements are not always available to the public. Often settlements between major corporations and tax authorities involve an adjustment to tax liability without an admission by the company engaged in any wrongdoing; the dispute is simply characterised as a difference of opinion over a tax treatment. One way to strengthen the Bill would be to require a company to disclose whether it was currently under investigation for tax offences in the UK or abroad, or where the company had reached a settlement with a tax authority following an investigation for a tax offence.

The Global Reporting Initiative tax standard is a finance reporting standard that provides enhanced public transparency for companies and their tax payments. In particular, it provides for companies to report their economic activities in each country where they operate and the taxes paid in each country—country-by-country reporting. This is a transparency mechanism for revealing corporate tax avoidance. This often involves a company moving profits from higher-tax countries into tax havens. If a company is engaged in profit shifting, that will appear in country-by-country reporting by a company showing very high profits in low-tax countries where the company has little economic activity, and low profits in higher-tax countries where much more activity takes place. For example, Amazon does not provide a breakdown in its accounts of revenues, profits and tax payments in non-US markets by jurisdiction, making it difficult for investors, the public and tax authorities around the world to evaluate whether Amazon is engaged in responsible tax practices.

The implementation of the GRI would allow for some necessary scrutiny. A group of Amazon investors put forward a shareholder resolution at the Amazon AGM in May 2022 calling for greater transparency in the company’s tax affairs and to make disclosures in line with the GRI. That resolution was defeated but was backed by 21% of independent shareholders. Country-by-country reporting is mandatory for multinationals engaged in the extractive and logging industries under rules implemented by several legislatures around the world. Country-by-country reporting is mandatory in the banking sector under EU legislation. Numerous multinational organisations now voluntarily report using the GRI tax standard. My amendment would require all large companies bidding for government contracts to produce a copy of reporting under the GRI tax standard. In addition, the supplier should report details of any tax investigations and report where it is based in a tax haven or is a subsidiary of a person based in a tax haven.

My second amendment would provide for a Minister to lay regulations listing those jurisdictions that are considered to be providing a tax haven to suppliers. Clearly my amendments are not the whole answer to the issue of tax shifting by multinational companies, but using the Bill would be one of the stepping stones that we could take to a much fairer tax situation in this country. I hope the Government will be sympathetic. I beg to move.

[Lord Fox (LD)]

My Lords, I rise as a cipher for my noble friend Lord Wallace, who has tabled a number of amendments in this group. He is unable to attend this and the next day in Committee, so I will be deputising for him.

I too welcome the noble Baroness, Lady Neville-Rolfe, to her new role, and congratulate her on getting to complete this Bill, which must be regarded as the plum legislative job available—so I say “well done” to her. During a debate on the economy a couple of weeks ago, she said from the Dispatch Box that she was very keen on “simplification” and cited simplifying procurement as being in her sights—now, here she is. However, before her well-deserved promotion, on the third day in Committee on 11 July, “Back-Bench Lucy” was more strident. She said:

“The more I listen, the more I feel that this Bill in many respects strikes the wrong note. It is overregulatory and calls for a rethink, which I hope the Government will be thinking about.”—[Official Report, 11/7/22; col. GC 359.]


On those grounds, I suggest that she should exercise her new power, withdraw this poorly drafted Bill and come back with one more in keeping with simplification and with her aversion to overregulation.

In the absence of any enthusiasm from the Minister for doing that, I speak to Amendments 306, 307, 308, 320 and 328, tabled by my noble friend Lord Wallace, some of which I have signed; I do not support all of the others. I thank the noble Baroness, Lady Hayman of Ullock, and the noble Lord, Lord Hain, for their support for Amendment 320.

An effective debarment and exclusion regime protects the public purse from rogue actors and drives up corporate government standards. Exclusion and debarment from procurement are potent anti-fraud and anti-corruption tools. The issue of companies with long records of corruption winning public contracts in this country is appalling. Nearly a quarter of local councils experienced fraud or corruption in 2017-18. Fraud costs the public purse up to 5% of government spending overall. I thank Spotlight on Corruption for these numbers.

The UK’s record on excluding these types of companies from participating in public procurement is not good, at best. The list of companies either from the UK or operating here that have been shown to have engaged in serious corporate misconduct is unfortunately lengthy and well publicised; yet, under the existing debarment regime, it has been, in practice, all but impossible to apply a discretionary exclusion in the absence of a conviction. There has been very little use of exclusion in the UK to date under current EU-based rules, and the Procurement Bill is an opportunity to address the weaknesses in those rules that have prevented exclusion from being used effectively to protect the integrity of the public purse. I am sure that the Minister would approve of replacing an EU law with a better UK law—these are suggestions for how to make it better.

This Bill as formulated contains some significant issues and crucial gaps that could seriously undermine the effectiveness of the debarment register and exclusion regime. There is a risk that the register will stand empty for many years, which would undermine the reputation of the register and the UK’s anti-corruption efforts in general. It is therefore crucial to get this right at this critical stage of the Bill’s development.

Amendment 306 seeks to make criminal offences for sanctions evasion grounds for exclusion from public procurement. The Bill currently contains no references to criminal offences for sanctions evasion. Given the Government’s current policy of imposing sanctions to ensure its foreign policy goals in relation to Russia’s invasion of Ukraine, and their ambition to use sanctions to achieve important foreign policy goals to be a force for good globally, this is a major omission. Incorporating criminal offences for sanctions evasions in the Bill would make companies across the UK take their obligations to comply more seriously. This amendment redresses this omission.

--- Later in debate ---

[Baroness Neville-Rolfe (Con)]

As the noble Lord said, we will come on to discuss those aspects, and I will try to answer that question when we get there. I have probably said enough on that.

Amendment 328 in the names of the noble Lords, Lord Wallace and Lord Fox, provides for a new discretionary exclusion ground in relation to deferred prosecution agreements. This issue was explored in the Green Paper. Due consideration was given to feedback from the public consultation, as well as discussions with the Serious Fraud Office and the Crown Prosecution Service. The Government’s response to the Green Paper set out the rationale for their decision not to include a separate exclusion ground on deferred prosecution agreements. In brief, the actions taken and commitments made by suppliers as part of the DPA typically constitute good evidence of self-cleaning. Reaching a DPA requires a supplier to accept culpability for the offence, co-operate with the relevant authorities and make reparations. Prosecuting authorities typically will not consider a DPA appropriate unless the supplier has already made reforms, such as proactive changes to corporate structures or the replacement of personnel.

DPAs will involve judicially approved terms that the supplier must commit to—for example, on actions to improve compliance and audit functions within the company, and external reviews to test those improvements to ensure that further misconduct does not occur. Non-compliance with a DPA is unlikely to be something that contracting authorities are equipped to assess. I hope that the noble Lord, Lord Fox, will understand and accept that.

Compliance is for either the Serious Fraud Office or the Crown Prosecution Service to assess, depending on which is the owner of the DPA in question. If a supplier fails to comply with a DPA, there are a number of options open to the enforcing body, including the prosecution of the supplier for the original criminal misconduct, but that cannot be part of procurement law, or for enforcement by the many differently sized authorities engaged in buying goods or services in the public sector.

Finally, Amendment 443 tabled by the noble Lord, Lord Wallace, seeks to remove

“a British Overseas Territory or a Crown Dependency”

from the definition of a UK supplier. The Bill confers rights on UK suppliers in a number of places, including, in Clauses 18 and 19, an entitlement to be considered as part of a competitive tender, or, in Clause 89, to access remedies. They are also used as the basis for an assessment of no less favourable treatment in the non-discrimination provisions, in Clause 82(2). This amendment would remove this guaranteed access to the UK’s procurement markets from suppliers from Gibraltar, which is the only overseas territory or Crown dependency whose suppliers currently enjoy access under the existing procurement regime.

Although overseas territories and Crown dependencies are not part of the UK constitutionally, they do not become party to treaties in their own right. The UK must extend the territorial scope of its ratification of treaties to include them. As such, overseas territories and Crown dependencies are unable to secure rights to markets in the United Kingdom in the same way as other states. That is a long way of saying that in view of the special nature of the trading relationship between the UK and overseas territories and Crown dependencies, it is right to include them in the definition of a UK supplier.

This discussion has been useful and illuminating to me. I respectfully request that the amendment be withdrawn.

[Lord Hunt of Kings Heath (Lab)]

My Lords, I am very grateful to the Minister. I particularly welcomed her comments on SMEs and training rollout. I really agree about the importance of investment in training as the Bill is enacted. However, I remain concerned about the Government’s approach, which seems supine in many respects when dealing with these multinational companies.

Only this afternoon at Oral Questions, we had a fascinating exchange about the remarkable decision to award Fujitsu a £48 million contract to upgrade the police national computer, given the role of that company in developing Horizon software for the Post Office. We were told by a Minister that in effect, there was no alternative because of the continuing arrangements with that company. Listening to the comments made by the noble Lord, Lord Fox, and the noble Baroness, Lady Bennett, about performance issues, corruption, competition infringements, which were added to by my noble friend, and the issues on tax, essentially the Minister has an ideological objection to the use of contracts to further government policy outside the narrow procurement interest. This is where I fundamentally disagree with her.

It is not good enough simply to say that it is down to HMRC. Procurement can be used to enhance policy in a number of areas. Many of these multinational companies are taking this country for a ride. We need to see tougher action. Having said that, I hope that we can continue to debate this important issue. I beg leave to withdraw my amendment.

Amendment 177 withdrawn.

--- Later in debate ---

Moved by

[Lord Hunt of Kings Heath]

185: After Clause 30, insert the following new Clause—
“Excluding supplier for involvement in forced organ harvesting
(1) Subsection (2) applies if a contracting authority determines that a supplier is located in a country categorised by a Minister of the Crown as at high risk of forced organ harvesting.(2) The contracting authority must treat the supplier as an excluded supplier in relation to the award of a public contract involving— (a) any device or equipment intended for use in organ transplant medicine or activities relating to human tissue, or(b) any service or goods relating to organ transplant medicine or activities involving human tissue.(3) A Minister of the Crown must by regulations made by statutory instrument make provision for the listing of countries considered to be at high risk of forced organ harvesting.(4) A country is at high risk where—(a) the country has high levels, or is suspected of having high levels, of forced organ harvesting or trafficking in persons for purposes of the removal of organs; or(b) the government of the country is directly or indirectly seen as supporting or indirectly supporting forced organ harvesting or trafficking in persons for purposes of the removal of organs.”Member’s explanatory statement
The amendment is designed to exclude suppliers located in a country at high risk of forced organ harvesting from being awarded a public contract involving any device or equipment intended for use in organ transplant medicine or activities relating to human tissue or any service or goods relating to organ transplant medicine or activities involving human tissue.

[Lord Hunt of Kings Heath (Lab)]

My Lords, in a sense, this amendment is very different from my first two. None the less, we are seeking here to use procurement legislation to advance government policy in relation to the awful practice of forced organ harvesting from prisoners of conscience in China. The practice was found by the China Tribunal—as advised by Edward Fitzgerald KC, who provided expert legal opinion to it—to be a crime against humanity and part of a possible genocide against Falun Gong.

Forced organ harvesting in China involves the removal of organs from a living prisoner of conscience for the purpose of transportation, killing the victim in the process. It is state sanctioned and widespread throughout China, with the Chinese Communist Party targeting individuals because of their religious and spiritual beliefs or ethnicity. The victims are known primarily to be Falun Gong practitioners, but more recent evidence indicates that Uighur Muslims are also targeted on a massive scale. Further to that, there are several lines of evidence showing that Tibetan and house Christians are likely victims of forced organ harvesting.

Regarding Uighurs and other minorities, the Office of the UN High Commissioner for Human Rights published its report on Xinjiang in August, stating:

“Allegations of patterns of torture or ill-treatment, including forced medical treatment and adverse conditions of detention, are credible, as are allegations of individual incidents of sexual and gender-based violence.”


It also stated that the treatment of Uighurs and others in Xinjiang by the Chinese Communist Party

“may constitute international crimes, in particular crimes against humanity.”

That is a most important and profound statement, made only three months ago.

Both Uighur and Falun Gong practitioners are arbitrarily arrested, detained in camps and tortured. They face sexual violence, disappear while in detention and are murdered for their organs, on a vast scale. A study published in April this year in the American Journal of Transplantation investigated whether Chinese transplant surgeons established first that the prisoners are dead, before procuring their hearts and lungs, or whether the cause of death was the organ procurement itself. The study was based on the dead donor rule—the most fundamental ethical rule in organ transplantation. It states that organ procurement must not commence until the donor is formally pronounced dead; the procurement of organs must not cause the donor’s death.

The paper, entitled Execution by Organ Procurement: Breaching the Dead Donor Rule in China, was written by Matthew Robertson and Dr Jacob Lavee. Dr Lavee is a transplant surgeon and the founder and a former director of the heart surgery unit at the Sheba Medical Center in Israel. In 2005, a patient told him that his insurance company had scheduled a heart transplant operation for him that would take place in two weeks. The patient flew to China and received the heart as arranged. That would be impossible unless the time of death of the donor was known in advance. Following this incident, Dr Lavee spearheaded the organ transplantation law in Israel, the first of its kind in the world, which prevented insurance companies from reimbursing expenses associated with illicitly obtained organs. Along with a range of reforms encouraging domestic donation, this stopped the China-to-Israel organ-trafficking pipeline in its tracks.

During this recent research, Robertson and Lavee found, in 71 different Chinese medical studies published between 1980 and 2015, sourced from 56 hospitals in 33 cities, that brain death could not properly have been declared. Therefore, the removal of the heart during organ procurement must have been the cause of the donor’s death. The authors state in a recent article in the Tablet,

“the act of execution was joined with the act of heart removal, and was carried out by surgeons on the operating table.”

Just think of that.

My amendment is designed to exclude suppliers located in a country at high risk of forced organ harvesting from being awarded a public contract involving any device or equipment intended for use in organ transplant medicine or activities relating to human tissue or any service or goods relating to organ transplant medicine or activities involving human tissue. Essentially, it would prevent any service or goods that may have been involved in or developed off the back of the forced organ harvesting trade from entering the UK. This includes organ transplant training, such as the training of Chinese organ transplant services, related education and research, as well as organ transplantation equipment.

I have been very encouraged by the Government’s recent willingness to legislate on this issue, such as through my amendment to the Medicines and Medical Devices Bill last year, which included consent provisions for imported human tissue for use in medicines; and the amendments to the Health and Care Bill in April this year, prohibiting the commercialisation of organ tourism. The noble Lord, Lord Alton, and the noble Baroness, Lady Northover, have been huge supporters of this approach and I am glad to see them here today.

These legislative steps have set a good precedent, both in our country and as a signal globally. I emphasise to the Minister that passing amendments such as this into British law is significant internationally. Other countries observe what is happening, and we are part of a global movement to try to get action to stop this reprehensible behaviour.

I am grateful to the Government for their sympathy for our approach, but I want to go further. In April this year, it was stated in a ground-breaking business and human rights legal advisory, written by international law firm Global Rights Compliance, entitled Do No Harm: Mitigating Human Rights Risks when Interacting with International Medical Institutions & Professionals in Transplantation Medicine, that

“medical professionals and institutions who have collaborations with Chinese medical institutions involved in forced organ harvesting face a risk of being charged with complicity in international crimes, including crimes against humanity.”

It goes on to explain that

“aiding and abetting ‘consists of practical assistance, encouragement, or moral support which has a substantial effect on the perpetration of the crime’.”

Prestigious medical institutions, such as the International Society for Heart and Lung Transplantation, are now taking action. In April this year, the society issued a policy that it would no longer accept submissions to its journal or for presentations at its conference related to transplantation and involving either organs or tissue from human donors in the People’s Republic of China. My forced organ harvesting amendment to the Procurement Bill is critical to protect our UK medical professionals and institutions from complicity. I beg to move.

[Lord Alton of Liverpool (CB)]

My Lords, it is a great privilege to follow the noble Lord, Lord Hunt of Kings Heath, in what was a powerful, disturbing and very thoughtful speech. I think all of us who are privileged to be in the Committee today are indebted to him for that and the way he introduced this group of amendments, to which I am a signatory, along with the noble Baroness, Lady Northover, and my noble friend Lady Finlay of Llandaff. She sends her apologies for not being able to be physically present today, but she strongly supports the amendment, as does the noble Lord, Lord Ribeiro. It is worth bearing in mind that both of those noble Lords have held very high office in the medical institutions in this country and it is good that their names are attached either to the amendment or to the arguments that go with it.

I declare interests as vice-chairman of the All-Party Parliamentary Group on Uyghurs, who the noble Lord referred to, and on Hong Kong, as patron of Hong Kong Watch and as a member of the Inter-Parliamentary Alliance on China. This amendment deals with a gruesome and barbaric lethal practice that has been prevalent in China. Last Thursday, here in the Moses Room, a debate was held on the International Relations and Defence Select Committee report on China, trade and security. The noble Viscount, Lord Younger of Leckie, was present throughout proceedings and the noble Lord, Lord Purvis, was present and contributed to those proceedings, during the course of which a number of us referred to the levels of trade and, inter alia, the level of procurement that is carried out with China by the United Kingdom.

The noble Lord, Lord Purvis, pointed out that we have a £40 billion deficit in trade with the People’s Republic of China. That would be reason enough for considering, in the context of resilience and dependency, why procurement policies with a country designated by the Government as recently as last month as “a threat” to the United Kingdom should be radically readdressed. During the debate last Thursday in the Moses Room, I referred to earlier debates in this Committee on the Bill specifically about Hikvision. It is worth recalling that the noble Lord, Lord True, was gracious enough to have several meetings in his office to discuss this, as well as dealing with it at that stage. I know the noble Baroness, Lady Neville-Rolfe, well enough—I congratulate her, as others have done, on her appointment as Minister—to know that she will take this as seriously as he did.

The company Hikvision is responsible for the surveillance cameras in Xinjiang referred to by the noble Lord, Lord Hunt. But these cameras were purchased through our procurement policies by great departments of state and are used in local government and by public authorities up and down the length and breadth of this country. These cameras are used to impose the surveillance state on the Uighur Muslims referred to by the noble Lord, Lord Hunt.

At the conclusion of our debate last Thursday, the noble Lord, Lord Goldsmith of Richmond Park, promised he would write to me in response to my question specifically about whether, during the next set of proceedings on the Bill—therefore, on Report—the amendments that many of us argued for at earlier stages will be agreed by the Government. I hope that the noble Baroness’s officials will talk to his officials before he writes that letter, so that we genuinely get joined-up government on this.

I hope they will also look at the Biden Administration’s legislation on goods made by slave labour, something that the noble Lord, Lord Coaker, and I have raised in other legislation and that we both, as well as other members of the Committee, feel very strongly about. They should also look at legislation the Biden Administration introduced called the CHIPS Act and the Inflation Reduction Act, which draw together the prioritisations of investing in domestic industry, tackling climate change and reducing dependency on authoritarian regimes. All those things should be done in the context of this Bill.

In parentheses, I remind the Committee that we bought 1 billion—not 1 million, but 1 billion—lateral flow tests from the People’s Republic of China and 24 billion items of personal protective equipment where China was recorded as the country of origin. The cost to the United Kingdom was a staggering £10.9 billion—about the equivalent of our now reduced overseas aid and development budget. This is British taxpayers’ money pouring through our procurements into the pockets of a country that stands accused of the appalling barbarism identified in Amendment 185, and indeed of genocide.

--- Later in debate ---

[Baroness Neville-Rolfe (Con)]

Clearly, I have learned during this debate. I will obviously have to learn a little more about how we have tackled this issue. As was said right at the beginning of the debate, there is clearly some difficulty around the principle of how much detail to include and how many things to cross-reference in the Bill but, in the light of the noble Lord’s helpful clarification, I will go away, look at the various areas and come back to him.

[Lord Hunt of Kings Heath (Lab)]

My Lords, this has been a very interesting debate. I am grateful to the noble Lord, Lord Alton, the noble Baroness, Lady Northover, and my noble friend Lord Coaker for their profound speeches. Of course, I also thank the noble Baroness, Lady Finlay, and the noble Lord, Lord Ribeiro, who cannot be here today.

The noble Lord, Lord Alton, put a number of pertinent questions to the Minister, not just about the UK-China hospital partnership but more generally about the principles behind our trade with China. I must say that I find government policy inconsistent and incomprehensible. The new Administration, if I can call them that, need to get a grip on what exactly our relationship with China ought to be in terms of diplomacy, trade and strategic investment. Over the past few years, it has seemed completely all over the place.

There is an argument—my noble friend Lord Coaker referred to it—about the principle of how much we should use procurement legislation for wider, desirable policy aims. I believe passionately that it is right to use a Procurement Bill to try to influence this abhorrent practice. I am grateful to the Minister because she gave a careful response and appreciated the seriousness of this abhorrent practice, which we are doing our best to help eradicate. She also acknowledged the changes made in legislation in the past few years. However, she was critical of the amendment’s wording; she has quickly taken on the mantle of ministerial office again, by finding all amendments that do not emanate from her own department technically deficient.

The Minister’s key point around what is wrong with the amendment is that it is guilt by exclusion. I understand that but I believe that the amendment is tightly drawn. It is not just about excluding suppliers

“located in a country categorised … as at high risk of forced organ harvesting.”

It would exclude only in the event of

“a public contract involving … any device or equipment intended for use in organ transplant medicine or activities relating to”

that. That is tightly drawn and entirely justifiable.

The Minister also said that these practices would be covered by the exclusion grounds in the Bill. We have now had a debate on that; I thought that the noble Lord, Lord Purvis, raised some important questions. I accept that one can look to general provisions in a Bill and say, “Well, those cover it”, but I believe that there is sometimes a strong place for explicit provision on a practice that we find abhorrent. I hope that the Minister will be prepared to discuss this with us between Committee and Report because I am convinced; I am grateful to my noble friend Lord Coaker for his pertinent comment that we will come back to this on Report. Having said that, I beg leave to withdraw the amendment.

Amendment 185 withdrawn.

Procurement Bill [HL]

Lord Hunt of Kings Heath Excerpts

Report stage
Monday 28th November 2022 Lords Chamber

[Lord Alton of Liverpool (CB)]

The millions and the thousands can multiply very rapidly in this debate. I apologise, but I think you get the point. It is over £20 million in the course of a year—£770,000 each and every single day.

I gave the noble Baroness notice of my intention to ask about this. Who authorised those acquisitions? Who decided that they should stay there? How much has it cost to date to store these items? How much has been budgeted to keep them in store at that cost of £770,000 every day, and for how long will they be stored? How much of the PPE that has been bought has proved to be defective and unusable? I would also like to know, first, how the Government intend to report the money returned to public funds by defaulting PPE suppliers through the actions of the faulty contract PPE recovery unit. Secondly, individual settlements are protected by commercial secrecy, so how will Parliament and the public be notified about money returned to public funds by defaulting PPE suppliers through the actions of the faulty contract PPE recovery unit? Thirdly, how do the Government intend to provide transparency and accountability in relation to money returned to public funds by defaulting PPE suppliers through the actions of the faulty contract PPE recovery unit?

It is clear that the NHS should be subject to far greater scrutiny, transparency and accountability. For all those reasons, I support Amendments 3 and 173 spoken to by the noble Baroness, Lady Brinton, which include the NHS in the definitions of a public authority for the purposes of the Bill.

[Lord Hunt of Kings Heath (Lab)]

My Lords, it is a great pleasure to follow the noble Lord, Lord Alton. When he speaks about the frailty of the NHS supply chain—I must declare my past presidency of the Health Care Supply Association—I am sure he is absolutely right to put these penetrating questions to the Minister.

I have two amendments in this group, Amendments 171 and 172, but I also want to speak to Amendments 3 and 173 in the name of the noble Baroness, Lady Brinton. She has rightly pointed to the potential confusion between two pieces of legislation in relation to the National Health Service and the procurement regime that it is to adopt in the future. The difficulty is compounded because, of course, we have not seen the draft regulations in relation to Clause 111, nor have we seen the draft regulations in relation to the amendment made in the Health and Care Act 2022 to the National Health Service Act 2006, after Section 12ZA. The 2022 Act gave huge powers to Ministers to establish their own procurement regime through regulations.

Clearly, there is every potential for confusion as to how these two sets of legislation are to work together, particularly if only NHS clinical services are to be covered by the disapplication in the Bill. That leaves a lot of questions for those working in the health and social care sectors as to how they are to operate the new processes. Given the nature of NHS commissioning and services, there are big questions about what happens if a contract incorporates clinical and non-clinical services. Under which set of regulations is procurement to be undertaken? Large hospital contracts—PFI contracts—often contain a mixture of clinical and non-clinical services, and the terms of the contract can sometimes last for 20 or more years.

Indeed, the more fundamental question is how we define “clinical services”. Some hospitals contract with private sector operators to provide, say, laboratory services the staff of which are employed by the private sector contractor. I would have called those clinical services; they are clearly directly related to clinical outcomes for patients. I am not at all sure how that is going to be covered by the two separate pieces of legislation. Of course, the NHS Confederation, which represents the bodies that operate the health service at the moment, including integrated care systems and NHS trusts, is obviously concerned about the confusion and potential distinction between the two sets of legislation.

Procurement Bill [HL]

Lord Hunt of Kings Heath Excerpts

Report stage
Wednesday 30th November 2022 Lords Chamber

Moved by

[Lord Hunt of Kings Heath]

91: Schedule 7, page 106, line 41, at end insert—
“Involvement in forced organ harvesting
15A (1) A discretionary exclusion ground applies to a supplier if a decision-maker determines that the supplier or a connected person has been, or is, involved in—(a) forced organ harvesting,(b) unethical activities relating to human tissue, including anything which involves the commission of an offence under sections 32 (prohibition of commercial dealings in human material for transplantation), 32A (offences under section 32 committed outside UK) or 33 (restriction on transplants involving a live donor) of the Human Tissue Act 2004, or under sections 20 (prohibition of commercial dealings in parts of a human body for transplantation) or 20A (offences under section 20 committed outside UK) of the Human Tissue (Scotland) Act 2006, or(c) dealing in any device or equipment or services relating to conduct mentioned in paragraphs (a) or (b).(2) “Forced organ harvesting” means killing a person without their consent so that their organs may be removed and transplanted into another person.”Member’s explanatory statement
This amendment is designed to give a discretionary power to exclude suppliers from being awarded a public contract who have participated in forced organ harvesting or unethical activities relating to human tissue, including where they are involved in providing a service or goods relating to such activities.

[Lord Hunt of Kings Heath (Lab)]

My Lords, in moving Amendment 91 I will support all the other amendments in this group.

In the Prime Minister’s speech to the Lord Mayor’s Banquet two days ago, he said that China posed a

“systemic challenge to our values and interests … a challenge that grows more acute as it moves towards even greater authoritarianism.”

I want briefly to draw the House’s attention to one aspect of that country’s behaviour in relation to the appalling forced organ harvesting from prisoners of conscience and to ask the Government to accept my very modest amendment as a small but important measure towards, I hope, ending this practice. This would give a discretionary power to exclude suppliers from being awarded a public contract who have participated in forced organ harvesting or unethical activities relating to human tissue, including where they are involved in providing a service or goods relating to such activities.

Forced organ harvesting in China is the removal of organs from a living prisoner of conscience for the purpose of transplantation, killing the victim in the process. It is state-sanctioned and widespread throughout China, with the Chinese Communist Party targeting individuals because of their religion, spiritual beliefs or ethnicity. The victims are known to be primarily Falun Gong practitioners and Uighur Muslims. There are also several lines of evidence to show that Tibetans and house Christians are likely victims of forced organ harvesting.

With regard to the Uighurs and other minorities in Xinjiang, the Office of the UN High Commissioner for Human Rights published its report into Xinjiang in August this year, which stated:

“Allegations of patterns of torture or ill-treatment, including forced medical treatment and adverse conditions of detention, are credible, as are allegations of individual incidents of sexual and gender-based violence.”


Both Uighurs and Falun Gong practitioners are arbitrarily arrested, detained in camps, tortured, face sexual violence, disappear while in detention and are murdered on a vast scale for their organs.

The evidence is now explicit. In April this year, a paper by Matthew Robertson and Dr Jacob Lavee was published in the American Journal of Transplantation titled “Execution by Organ Procurement: Breaching the Dead Donor Rule in China”, which was cited in the US Congressional-Executive Commission on China Annual Report 2022. Their paper found that, in 71 different Chinese medical studies published between 1980 and 2015 and sourced to 56 hospitals in 33 cities, brain death could not have properly been declared, and therefore the removal of the heart during organ procurement must have been the cause of the donor’s death. The authors state in a recent article in the Tablet that

“the act of execution was joined with the act of heart removal, and was carried out by surgeons on the operating table.”

--- Later in debate ---

[Baroness Neville-Rolfe (Con)]

They are mandatory grounds for exclusion, so if you find that you have a security issue—as we obviously found in relation to Hikvision—those become mandatory exclusions. On modern slavery, again, they are mandatory exclusions. Clearly, if a company is able to self-clean and has shown that it has changed the arrangements, it will not necessarily stay on the debarment list. I do not want to mislead the noble Lord.

[Lord Hunt of Kings Heath (Lab)]

My Lords, this excellent debate has been both moving and profound, because it has dealt with horrific human rights abuses in China but has also attempted to develop an argument about our strategic relationship with that nation.

The Minister said that she was disappointed by some of the remarks. She gave us a full reply, which I am very grateful for, but I too was rather disappointed by her response. Essentially, she said that our concerns are legitimate but that this Bill is not the right place for them to be expressed. But, as the noble Lord, Lord Fox, and my noble friend Lord Coaker both suggested, this is a Procurement Bill, setting the regime for government procurement for a number of years ahead. Where better to place values—not just the issue of the lowest common denominator price—than in this Bill, which sets the parameters under which billions of pounds are going to be spent by government and government agencies over the next decade?

The arguments that the Minister put forward were technical, and the Government could have come back and tabled their own amendments, which might have met the technical issues she faces. However, ultimately, the Government have set their face against expressing some profound values in this legislation, but I think that we should do so. I would like to test the opinion of the House on Amendment 91.

Procurement Bill [HL]

Lord Hunt of Kings Heath Excerpts

Consideration of Commons amendments
Monday 11th September 2023 Lords Chamber

I started my speech by paying tribute to the noble Baroness, Lady Neville-Rolfe, and the departmental officials who have worked on the Bill. I should like to end it in that spirit as well. I greatly appreciate the concerted engagement from the Minister, the quiet diligence of officials and the Government’s openness to moving on this important issue. In conjunction with that, I also thank Sam Goodman of Hong Kong Watch, of which I am a patron, as I have said, for some helpful background work. Given the commitment today by the Minister at the Dispatch Box to the publication of a timeline, a definition of sensitive sites and the allowance of some parliamentary oversight, I will not be moving this amendment to a Division. However, the House can be sure that I will watch this with an eagle eye and return to it, should the need arise in the future.

[Lord Hunt of Kings Heath (Lab)]

My Lords, I will speak to my Amendments 102A and 102B. It is a great pleasure to follow the noble Lord, Lord Alton. I very much agree with the thrust of what he said and look forward to the results of his eagle eye, which I am sure will come to your Lordships’ House over the next months and years. Like him, I also thank the Minister for her stewardship of the Bill. It has taken so long that I recollect that on our first day in Committee, the noble Baroness herself had laid many amendments which she seemed to have to refute later on in proceedings on the Bill. At least she knows how it feels to have a government Minister reject so many well-argued points.

I thank the Minister also for what she said about the Government’s view of the appalling atrocities being committed in China, with the removal of organs from a living prisoner of conscience for the purpose of transplantation, killing the victim in the process. It is state sanctioned and widespread throughout China. The victims at the moment are known to be primarily Falun Gong practitioners, but most recent evidence suggests that Uighur Muslims are also being targeted on a massive scale, particularly in Xinjiang.

My amendment was supported by noble Lords all around the House on Report. Essentially, it gave a discretionary power to exclude suppliers from being awarded a public contract if they have participated in forced organ harvesting or unethical activities relating to human tissue, including where they are involved in providing a service or goods relating to such activities. The effect of the amendment would have been to prevent any service or goods that may have been involved in, or developed off the back of, the forced harvesting trade entering the UK. When it went back to the Commons, the Government took the provision out in Committee. This was challenged on Commons Report, led by my honourable friend Marie Rimmer. Despite support from MPs of all parties, that was not successful, so I am asking noble Lords to send it back to the Commons for further consideration.

My reasons, briefly, are threefold. First, the scale of the atrocities being carried out in China, specifically in Xinjiang, are becoming ever clearer and more horrific. Secondly, I believe that Ministers were wrong in dismissing the need for the amendment, both in the response they gave in the Commons to my colleagues and in the comments that the Minister has given tonight. Thirdly, I have to agree with the noble Lord, Lord Alton, that the context in which this is being debated is, frankly, that government policy towards China is completely inadequate to the threats that country poses to the interests of the United Kingdom.

On the scale of the atrocities, I can do no better than to quote what Sir Iain Duncan Smith said on Report in the Commons. He referred to the 2022 UN report, which found serious human rights violations in Xinjiang. He said:

“They seem to be about the most significant human rights abuses currently happening in the world,”—[Official Report, Commons, 13/6/23; col. 205.]


whether we use the term “genocide” or not.

What the Minister has essentially said is first that we do not need to do this because there is a discretionary power in the Bill already, and secondly that there is no evidence, as far as the Government are aware, that a supplier to the UK public sector has been involved in forced organ harvesting. On the first point, I believe that there is considerable merit in making explicit reference in the Bill to this matter, so that public authorities are in no doubt whatever that they can use a discretionary power to deal with companies that may be dealing, maybe inadvertently, in this abhorrent trade. Secondly, I think there is evidence of taxpayers’ money being spent on companies involved in forced organ harvesting. For example, pharmaceutical companies may be supplying immunosuppressant drugs to hospitals that have been reported to remove organs from prisoners of conscience.

As I have said, we cannot consider these matters without seeing them in the context of UK policy towards China. I am not going to repeat what the noble Lord, Lord Alton, said, nor to requote. We have now had our Lordships’ Select Committee, then chaired by the noble Baroness, Lady Anelay, the Intelligence and Security Committee and the Commons Foreign Affairs Select Committee, in its report only last month on the Indo-Pacific tilt policy. They all draw attention to the Government’s woefully inadequate response to the threat that China presents and to the very ambiguity there is in policy. We can see the obvious tension between our security, on one hand, and the willingness and wish of the Government to trade with China and to encourage Chinese investment, but I am afraid that, in trying to get a balance, we have ended up with a Government with a wholly inadequate and incoherent policy.

My amendment is very modest. All it does is give the decision-maker discretionary powers to exclude a supplier from a procurement contract if it

“or a connected person has been, or is, involved in … forced organ harvesting, or … dealing in any device or equipment or services relating to forced organ harvesting”.

It would be the first piece of UK legislation to include and define forced organ harvesting. It would be a huge step in preventing UK complicity in forced organ harvesting, and I urge the House to support it.

[Baroness Northover (LD)]

My Lords, I was a signatory to earlier amendments and we have just heard the noble Lord, Lord Hunt of Kings Heath, make a very cogent case for the Commons to think again about his amendments. I will be very brief, given the hour. The noble Lord built on what the noble Lord, Lord Alton, outlined just now, and his case is backed by international investigation and evidence. Thus, for example, the Office of the UN High Commissioner for Human Rights, not an institution that would say this lightly, concludes in relation to Xinjiang:

“Allegations of … torture … including forced medical treatment … are credible”.


The Minister in the Commons and now the Minister in the Lords have argued that current legislation covers the problem identified in this amendment, but noble Lords will have heard the noble Lord, Lord Hunt, make a very persuasive case that this is not so. My noble friend Lord Fox will comment further shortly but, if the noble Lord decides to put this to a vote, from these Benches we will support him.

--- Later in debate ---

Moved by

[Lord Hunt of Kings Heath]

At end insert “and do propose Amendment 102B instead of the words so left out of the Bill—

102B: Schedule 7, page 110, line 31, at end insert—
“Involvement in forced organ harvesting
14A (1) A discretionary exclusion ground applies to a supplier if a decisionmaker determines that the supplier or a connected person has been, or is, involved in—
(a) forced organ harvesting, or
(b) dealing in any device or equipment or services relating to forced organ harvesting.
(2) “Forced organ harvesting” means killing a person without their consent so that their organs may be removed and transplanted into another person.””

Procurement Bill [HL]

Lord Hunt of Kings Heath Excerpts

Consideration of Commons amendments
Wednesday 25th October 2023 Lords Chamber

[The Minister of State, Cabinet Office (Baroness Neville- Rolfe) (Con)]

My Lords, the other place has now been clear, for the second time, that it is firm in its position on this amendment. Noble Lords asked the Commons to reconsider, and it has reached the same decision.

The Bill creates new rules for suppliers and contracting authorities that will stay on the statute book for the foreseeable future. We therefore need to be measured and prudent in our approach and avoid imposing further unnecessary bureaucracy on UK businesses that duplicates both the existing provisions in the Bill and the steps being taken outside the legislation.

I commend the noble Lord, Lord Hunt of Kings Heath, for the debates he has led on organ harvesting. We share a unanimous view that organ harvesting is an abhorrent practice that has no place in our supply chains. Accordingly, if a supplier or one of its connected persons fails to comply with the established ethical or professional standards within its respective industry, including relating to the removal, storage and use of human tissue, the supplier could face exclusion on the grounds of professional misconduct. However, as far as I am aware, no supplier to the UK public sector has been involved in forced organ harvesting. Given that the exclusion grounds in the Bill have been selected based on the areas of greatest risk to public procurement, it is not necessary to single out organ harvesting in this Bill.

The Government are already actively addressing this awful practice. For example, it is an offence to travel outside the UK to purchase an organ, by virtue of new offences introduced by the Health and Care Act 2022. In addition, the Government continue to monitor and review evidence relating to reports of forced organ harvesting and maintain a dialogue with leading non-governmental organisations and international partners on this very important issue.

I make one further remark concerning an issue which, while out of scope of today’s debate, is of significant importance to this Bill and the country’s security. It relates to concerns raised by the noble Lord, Lord Alton, following recent press coverage regarding surveillance equipment, which I look forward to discussing with him in person tomorrow. On 24 November 2022, the Chancellor of the Duchy of Lancaster made a Statement in the other place instructing government departments to cease deployment on their sensitive sites of surveillance equipment produced by companies subject to the National Intelligence Law of the People’s Republic of China.

During our last debate in this House, I set out the definition of “sensitive sites” to which our commitment would apply and which I am happy to reiterate today. As I said on 11 September, our commitment will apply to government departments and cover their sensitive sites, which are any building or complex that routinely holds secret material or above, any location that hosts a significant proportion of officials holding developed vetting clearance, any location routinely used by Ministers, and any government location covered under the Serious Organised Crime and Police Act 2005. I went on to reiterate that our commitment does not extend to the wider public sector. However, in no way is this an endorsement of the use of such surveillance equipment by these organisations or by organisations in the private sector. Indeed, these organisations may instead choose to mirror our action. I believe that some of them already have, including the police.

I beg to move.

[Lord Hunt of Kings Heath (Lab)]

My Lords, I am very grateful to the Minister for the explanation behind the Motion. She kindly referred to the amendments I tabled on Report following our debate in Committee, which focused on the appalling practice of forced organ harvesting, principally in China, which involves the removal of organs from living prisoners of conscience for the purpose of transplantation, killing the victim in the process. It is state sanctioned, widespread throughout China and has become a multi-billion-pound commercial operation.

We know that the victims are mainly Falun Gong practitioners, but more recently, evidence has indicated that Uighur Muslims are also being targeted on a massive scale. Further to that, there are several pieces of evidence suggesting that Tibetans and house Christians are as likely to be the victims of forced organ harvesting. As the noble Baroness said, my amendment was passed by your Lordships’ House on Report and went to the Commons, where it was rejected. We had another go in September and again, I am afraid, the Commons has reinserted the original provisions in the Bill.

I regret that this has happened for three reasons, the first being the scale of the atrocities being carried out in China and specifically in Xinjiang province. Secondly, Ministers are wrong to dismiss the need for the amendment. Above all else, its passage would have been a powerful signal in the UK and globally of our abhorrence of these awful practices. Thirdly, you cannot consider my amendment on forced organ harvesting without setting it in the context of the Government’s approach to China more generally. The Prime Minister has talked quite tough in recent weeks on the Government’s approach to China. However, the overall approach, to put it at its kindest, is clouded in inconsistency, ambiguity and sometimes downright confusion. That has been reflected in any number of Select Committee reports over the last year or two.

However, I recognise that this has gone as far as I could expect it to go. I am grateful to all those who supported me, particularly my Front Bench, the Lib Dems and many noble Lords around the House. I particularly pay tribute to Lord Bernie Ribeiro, who retired from the House on Monday. He has been a tower of support to me on this very worrying issue over many years. I wish him all the best in his retirement.

[Lord Fox (LD)]

My Lords, we should all be grateful to the noble Lord, Lord Hunt, for bringing this issue back on a number of occasions. We share the great disappointment that the Government have not seen fit to use their majority to include this in the Bill. As the Minister herself said: at this point there is no such practice going on, so there is no jeopardy, but it puts down a marker and it makes a very important point about ethical procurement and this particularly horrifying issue. I hope the comments that Ministers have made in this place, and in the other place, are used to emphasise the need for ethical process during procurement; this is perhaps the starkest example, but there are many others. It is with regret that it leaves your Lordships’ House without the noble Lord’s amendment, which we supported.

I thank the Minister for her comment on sensitive sites and Hikvision. It is somewhat intriguing because I suspect that the reason this has come up is because Hikvision is circulating material to its potential clients—and I imagine these are the non-sensitive clients—which seeks to use the Government’s language as an implicit endorsement of its continued operation in this country. I suspect that is why the Minister has stood up and made that comment. I hope that the Government can explain to Hikvision that this is an inappropriate use of their language, to try to sell its product in the face of a very particular problem, which has been highlighted, and one that is also a problem in non-sensitive sites across the country. I am interested to understand—either offline or online from the Minister—how they are taking this up with Hikvision.

This Bill has been on a journey since it started in your Lordships’ House. The next Bill is the exception, but rarely has a Bill received so many amendments. In the main, we have substantially improved the quality of this Bill through co-operation; through the hard work of the Minister, the Minister’s team and, of course, your Lordships. The normal character of these things is that we leave matters in a jovial and hearty way, but I am afraid I am not going to because I will return to an issue.

This is not in reference to the noble Lord, Lord Hunt, but the fact is this Procurement Bill was constructed to guide procurement across the whole country. It is supposed to be the way in which all procurement proceeds, with one exception: the largest single area of procurement in the country, the National Health Service. That would be allowable if there was a gold standard procurement process in place in the NHS. Quite clearly there is not. The Health and Care Act 2022 has not set out a gold standard procurement process, and there have been no processes that we can see which deliver that.

Since the last time we discussed this Bill—since the last time the Minister was standing at the Dispatch Box telling us that we do not need proper procurement processes for the National Health Service—there has been further evidence of huge abuses of procurement in the NHS. We do need this, and in the absence of an actual system that sits in the NHS, this system should apply. By not applying it the Government will preside over the waste of hundreds of millions of pounds that could have been spent on necessary services, due to very poor procurement practice. In that vein we are extremely disappointed that the Government have not seen fit to take the advice of your Lordships and include the NHS in this Bill.

We look forward to seeing how this Bill is applied across the country and, I hope, to seeing some benefit from its practices.