Public Procurement and the Civil Society Strategy

Lord Pickles Excerpts

Thursday 23rd May 2019 Lords Chamber

[Lord Pickles (Con)]

My Lords, I draw the attention of the House to my declaration of interests, particularly relating to Holocaust remembrance and the various bodies that may occasionally bid for contracts from the Government.

I congratulate my noble friend Lady McGregor-Smith. This has been an interesting debate. I particularly commend to the House, at a time when Crossrail is receiving the disapprobation of many people, the technical skills that Crossrail has managed to achieve, which she rightly pointed out; the number of apprentices, including female apprentices; and the college of engineering set up in the East End of London. The problems that have occurred have been mainly with software. That does not in any way diminish these great achievements.

The noble Lord, Lord Haskel, made some telling points, as always, on tendering standards. But it was when the noble Lord, Lord Shipley, spoke that I felt my ears burning and a greater sense of despair. It is time to confess: I am the guy who abolished the Government Offices for the Regions, and I regret their demise not for a moment. They were essentially a procedure; a passing of messages between government and the centre. I passionately believe in devolution. This country has too many levels of government that intercede between themselves and access. I could never imagine those great giants of municipal power, the Chamberlains, wanting to look over their shoulders to see what success looks like—the words that bring despair to any ministerial office when somebody wanders in and asks that most asinine of all questions.

I pay particular tribute to my noble friend Lord Maude. It was a joy to work closely with him in government and to work together at Central Office. Both of us know what pain actually feels like. He remains an enormously creative force in this area. He is absolutely right to say that process is king as far as the Government are concerned. I remember watching in my youth a “Monty Python’s Flying Circus” sketch in which a group of men discuss how to get from Kent to Addis Ababa. To cut a long story short, there is an elaborate description of how to negotiate the various roads of Kent, taking in various roundabouts and bypasses—and then, when you get to Dover, “you turn right towards Africa”. There is always something missing in procedure.

The Public Services (Social Value) Act 2012 was cautious in its approach—I remember the discussions. That is understandable, as it was a new thing. It brought out many of the fears of officials and politicians about those who are accountable to the public purse. Risk-taking does not come easily to those involved in government. Something out of the ordinary is always seen as risky. Far better to stick with the herd and be wrong than to try to do something unusual and be right. The unorthodox unfairly lack reward.

My noble friend Lady McGregor-Smith talked about the European tendering rules. I have some experience of those. I would frequently write to local government to point out the de minimis rule, the threshold at which the European Union did not require a detailed tendering process. It was interesting that very few local authorities took advantage of the de minimis rule. The safest thing for the officials was to go through the whole panoply.

Some would perhaps suggest that what we really need to do is to expel, remove and abolish this herd instinct mentality. That is a great idea until you find yourself in the second hour of being grilled by the Public Accounts Committee, when your boldness might not seem quite so exciting. But we should use that disadvantage and weakness of the herd mentality, turn it into a strength and make social benefit the norm.

I hope that my noble friend the Minister will note that I share the concern that some fear and timidity is still reflected in the strategy. As the NCVO points out, with regard to services, goods and works, the strategy commits all central government departments to account for rather than consider social values for new procurement. It has always advocated widening the remit of social value in all public sector contracts and this commitment is seen to be in the right direction, but we must move forward and offer more reassurance. Guidance is an important point of comfort for making social benefits more mainstream, particularly statutory guidance—an important point made by the noble Lord, Lord Shipley.

Training is also important, and I too join the NCVO in welcoming that the strategy commits all central government commercial buyers to undertake training on how to take account of social value in commissioning and procurement. I hope that this commitment is devolved and understood at a local level. This cannot be a fringe thing—the kind of thing for my old department, now renamed the Ministry of Housing, Communities and Local Government, or for DCMS. It has to be absolutely mainstream to the Government and all departments should account for it.

The question that has been implicit throughout the contributions today is, is this compatible with value for money? We understand that procurement comes out of a murky world developed to ensure value for money, fairness and accountability—blind bidding. There is the great ceremony of opening the tenders, as a councillor. It is a great day. You arrive in the chief executive’s office and lots of people are looking round. It comes out of that murky world best described in David Peace’s Red Riding Quartet.

There is also a problem in the world of political perception and prejudice. Some feel that only the state can legitimately provide or shun outsourcing. The Institute of Directors found that at least £15 billion could have been saved had the last Labour Government taken the decision to do that. But there is another side of the divide. I am an ex-Conservative Party chairman and ex-Secretary of State and often, when I talked to council leaders, they wanted to impress this visiting swivel-eyed Thatcherite, so they would brag about how much they had outsourced, almost as if that were an end in itself. I always asked two questions: how can you improve the service, and what have you been able to do that you have not been able to do before? I must say, seven out of 10 times, I was disappointed by the reply.

As the noble Lord, Lord Haskel, said, outcome is everything. We should use the tendering process to bring about social change. We have all had the benefit of the Equality and Human Rights Commission briefing, which said that experience has shown that pre-market engagement is important and that experience from Scotland suggests that the more specific the tender is in its desired outcomes—for example, setting out the social outcomes for the contract in the pre-market engagement—the more likely it is to achieve its aims.

My noble friend Lord Maude spoke about how such pre-market engagement is important; I cannot match his eloquence. When I was a very new Member of Parliament, I was on the Environment Committee. We audited some contracts. A chap who knew all the words came up in front of us, talking about step change and stakeholder consent. He made me think of a PG Wodehouse character talking about Shakespeare: it all sounded very well but was actually quite meaningless. He was accompanied by a straightforward engineer. Eventually, the chairman asked, “Well, what do you think about sticking to the contract and ensuring that value is provided”? He said that sticking to specifications was a bit like walking on water: it is better if it is frozen. He said that it is better if the specifications are fixed and known and if the outcomes are delineated.

It is the function of government to drive social change. Equality is a key consideration. For example, it is encouraging that we can improve on the high-level outcomes suggested in the consultation: on employability and skills, as talked about by the noble Baroness, Lady McGregor-Smith; on the gender pay gap; and on the increased representation of disabled people, ethnic minorities and people with mental health conditions. A printing firm in my former constituency employs people who have had mental health concerns; it is a very valuable asset to the town. These contracts should be about community cohesion. In looking for value for money, the Government should think about making that difference and increasing the skill set and prosperity of a locality.