Small Business, Enterprise and Employment Bill

Lord Popat Excerpts

Wednesday 14th January 2015 Grand Committee

[Lord Mendelsohn]

This is a probing amendment, which seeks to ask the Government to set out more clearly how this clause will improve the current position and is intended to operate. This is indeed an amendment which covers the mystery shopper. In February 2011, the Cabinet Office supplier feedback service was extended to allow small businesses to ask about procurement processes when they were unsuccessful or felt that the procedures or systems, or how they were being treated, were unfair. This was later renamed the mystery shopper scheme, which I have enjoyed reading about.

Looking through the document headed Mystery Shopper Publication Table October to December 2014, I came across a fascinating story about the UK Shared Business Services. The description says that:

“A Mystery Shopper raised concerns about a procurement by UK Shared Business Services … for ‘the Small Business Campaign’. The supplier read in a media article that they had been unsuccessful prior to receiving any response from”,

those services. The response from the investigation by the mystery shopper service said:

“We investigated this case and UKSBS have confirmed that unfortunately information was made publically available prior to the official notification letters being sent”.

Its conclusion was that the United Kingdom’s Shared Business Services,

“are looking into their internal processes to ensure that this situation does not re occur (including ensuring training is put in place for users of the procurement process)”.

I have never seen a leak more extensively reported in a government document and I found it very amusing. However, we commend the mystery shopper, which performs an exceptionally valuable service and shows tremendous potential for development. One of the things which we commend is that it is evolving and not a static instrument. It has some direct attention and modifications come as a result of that.

I would like to probe what is in the Bill. Clause 39 provides the Minister for the Cabinet Office and the Secretary of State with a power to investigate the exercise by a contracting authority of relevant functions relating to public procurement. This essentially puts the existing mystery shopper service on a statutory footing. On the face of it, it seems strange that the clause makes provision for the Minister to carry out the investigations and does not allocate any powers to the Minister to delegate. I am sure that there are some very interesting drafting answers in the Minister’s file. How is this intended to operate? I am sure that while a number of Ministers could fit in the time to spearhead public procurement investigations, some may have less time and, possibly, not even have the skills.

The main purpose is to move an informal process and the Explanatory Notes state that the Bill,

“will make contracting authorities legally obliged to provide information on request”.

I would be grateful if the Minister could provide us with further details on this problem. I think that I have read through all the published mystery shopper documents and none has stated this to be a problem, so I wonder why it has emerged as one of the foundations in the Explanatory Notes. I would guess there have been some difficulties and I would be grateful if the Minister could tell us what they have been and whether particular departments, agencies or authorities have been at fault.

The Explanatory Notes state:

“Ministers and Government departments will continue to comply with the current Mystery Shopper scheme as a matter of interdepartmental co-operation”.

Does this mean that there will be an exclusion when they look into each other’s departments and, therefore, this will be done without the statutory obligation to provide information in a timely fashion?

As this seems to relate to matters about how the investigations are conducted, our amendment seems eminently sensible. It simply asks for more transparency around the investigation process and asks for details to be published including the focus, findings and evidence of the investigation. Naturally, an exception is made for commercially confidential information and is a means to probe the entire clause and some of the details that we think are missing about how these investigations will be carried out in an effective and timely manner.

Finally, in Amendment 35V, we consider the exercise of Ministers’ time to be so valuable and their insights to be so useful that we suggest that details of the investigation should be published including the focus, findings and evidence considered. Commercially confidential evidence is, naturally, excluded from this. I beg to move.

[Lord Popat (Con)]

I am pleased that the noble Lord, Lord Mendelsohn, welcomes the mystery shopper service. It plays a very important role, and I am glad for his support for publishing the results of investigations in the interests of transparency. I am sure that noble Lords will be reassured to know that the Crown Commercial Service already regularly publishes results of these investigations. Our published results normally cover the focus of the investigations, the findings and, critically, the action agreed by the contracting authority to rectify the issues found. We also highlight where a contracting authority has refused to accept our recommendations.

Publication of results is an important feature of the service, as it enables the Government to highlight poor practice and the advice given to rectify it, from which other authorities can learn. It also provides a way of naming and shaming public bodies which do not accept recommendations. When appropriate, it can also be used to name large suppliers who do not pay their small business subcontractors promptly in public sector supply chains. In addition, annual reports are published which highlight key themes and advice, including the results of proactive public procurement spot checks. These findings have concluded that there remain issues relating to excessive qualification requirements being demanded by authorities in assessing financial strength, poor use of pre-qualification questionnaires and poor payment practices. These publications are broadcast by Twitter and potentially reach up to 4 million people.

Publishing more information does not fit with our aim of publishing brief, user-friendly reports, appropriate to the issue being investigated. Also, very often the documents we look at, such as tender documents and pre-qualification questionnaires, are already publicly available on authorities’ websites. Increasingly, this type of information will be available through links from Contracts Finder. Additionally, a key element of mystery shopper is its agility. The team can act speedily to raise concerns and resolve issues. It would be wasteful to bog them down by obliging them to publish the evidence considered and to discuss with authorities whether certain documents or information are commercially sensitive.

The proposed amendment would restrict the Minister to publishing specific details of each case. As the clause stands, the Minister can continue to publish reports of investigations in a flexible and user-friendly way, while respecting commercial confidentiality.

The noble Lord, Lord Mendelsohn, also asked how often authorities failed to comply with a mystery shopper investigation. In the last six months alone there have been 15 instances during investigations of referrals and spot checks where we have been unable to obtain any responses or get hold of documents. These new powers would have helped us get answers in all of these cases. Co-operation between departments is no reassurance to the public. Ministers are not to be legally bound by mystery shopper powers, just like other authorities.

The point of the clause is to enable the Minister for the Cabinet Office operating through the mystery shopper service to enforce demands for information and assistance for the courts. It would not be feasible or realistic for the Minister to bring legal proceedings against another Minister or government department. I hope that I have explained to my noble friend—the noble Lord—why we feel this amendment is not feasible. I will be happy to write to him. I hope that he will withdraw the amendment if he has found my explanation reasonably acceptable.

[Lord Mendelsohn]

My Lords, I am grateful to the Minister for describing me as his friend—perhaps mistakenly. I hope that my charm offensive has at least achieved some results in this Grand Committee.

I am also grateful for his explanation and for the clarification. I wish to stress that we believe that the scheme—the initiative—is good and we are pleased to see added strength given to it. I am also very pleased to see the noble Lord, Lord Young of Graffham, nodding vociferously in the background as this is something on his radar and I am sure will continue to be a lever that he will pull and push with great force to try to ensure that it is delivering for small business.

I have one observation on the mystery shopper issue. I noted that the Crown Commercial Service always responds quickly to these measures on the outcome of a case and recommendations. I hope that that sense of speed will be carried across government to make sure of that. In light of the Minister giving more detail in writing so that our support can be further enhanced, I beg leave to withdraw the amendment.