Procurement Bill [HL]

Lord Purvis of Tweed Excerpts

Committee stage
Monday 4th July 2022 Grand Committee

[Lord Wigley (PC)]

Scotland may come in but, at the moment, it is doing its own thing. This is a matter of getting a process where fine-tuning is possible.

It is not so much the content that concerns me—frankly, I was engaged in other things yesterday and did not have an opportunity to work through the amendments. As I said in the Chamber, the previous Sunday I worked through every one of the 80-odd amendments, so that I could have a coherent conversation with the Welsh Minister, civil servants in Cardiff and noble Lords who were involved, including the noble Baroness, Lady Humphreys, and the noble and learned Lord, Lord Thomas of Cwmgiedd. I did so in order to get their understanding. To be fair, they were constructive about this Bill—as the Bill stood, relatively few points were of contention to them. But as I indicated earlier, I am concerned that they have an opportunity to see whether any of the changes that are now being made through this large number of amendments might have an effect on their understanding of its slightly different application in Wales than in England.

That is the general intention: to get a system of procurement that can work for the Welsh Government in delivering their economic targets, which they have using successfully over the past few years, and to do so in a way that does not disrupt the UK market. A balance must be struck there. It is essential that both ends of the M4 understand each other on this. I am sure that the noble Baroness who opened for the Opposition will have had conversations with Welsh Ministers and will know about their concerns.

This is not about undermining or opposing the Bill. It is about making sure that it works properly, as intended, for both sides. That is what I hope for. If it is necessary to step back at this point, check and make sure that that is the case, it would be far better for us to do that now rather than pass into law things that become challengeable in the courts, at which point we will end up with all sorts of mess.

[Lord Purvis of Tweed (LD)]

My Lords, I regret I was unable to participate in Second Reading. However, I followed that debate and have read the Minister’s letter to those who took part. I also have amendments that we will be discussing later in Committee.

The noble Lords, Lord Fox and Lord Lansley, the noble Baroness, Lady Noakes, and I are now veterans of legislation that the Government have sought to change quite radically. There were at least two iterations of the Trade Bill, and then there was the Professional Qualifications Bill. That has raised a wry smile on the noble Baroness’s face, and it has brought back significant memories.

The difference, however, is that, for those Bills, the Minister was able to recognise not only the mood of the House but the practical consequences of bringing forward significant changes without there being a degree of consensus—as the noble Baroness, Lady Hayman, has said—at least on understanding what the Government were intending to do before they brought forward the changes. The passage of the Professional Qualifications Bill was paused. The Government recognised that their case had not been made, preparations had not been in place and that the materials were not available for Parliament to do its constitutional duty to scrutinise. I hear the Minister repeat time and again in the Chamber how much he values this Parliament, and this House in particular, doing our job. However, on this Bill, which he is responsible for, he is denying us the very tools to carry out this proper scrutiny work.

There is a precedent of other Ministers and other departments recognising that a pause is not a government defeat but will strengthen their case when they bring back their properly worked out amendments. Indeed, on the Professional Qualifications Bill and Trade Bill, there was consensus on the amendments brought forward at the end. It helped the Government carry out their job, as we were sincere in believing that they had faith in their proposals.

If we are to be soothsayers as far as understanding what the Government are seeking to do, then the noble Lord, Lord Lansley, made a reasonable fist of trying to interpret Amendment 1—the Minister chose not to do so. If the noble Lord is right or wrong, we should at least know what the Government intend when changing that proposal because, as my noble friend Lord Fox, and the noble Baroness, Lady Hayman, indicated, not a single government amendment has come with an explanatory statement.

I refer to the Cabinet Office Guide to Making Legislation from 2022, which the Minister is responsible for—I am certain the Minister has a copy; I can lend him mine if he wants. Section C is on “Essential Guidance for Bill Teams”; I think the Bill team is sitting behind him. In paragraph 22, on Amendments—this is from the Cabinet Office’s own guidance, not from me—it says:

“All government amendments require an explanatory statement, in plain English, setting what an amendment will do.”


So, why did the Minister refuse that on this Bill? It is a mockery of the guidance.

The Minister, after making his apology to the Grand Committee, chose not to outline any of the amendments. He did not explain whether Amendment 1 and the others will have significant policy implementation differences. If the noble Lord, Lord Lansley, is correct, then they will. That is how all of those who will be putting together procurement and replying to tenders will interpret the legislation, so of course it will have an implication on that. That is why we look at impact assessments to consider what level of consequence there will be.

The Government have not felt it necessary to bring any changes to the impact assessment—unlike for the Professional Qualifications Bill, I remind the Minister. However, this is also stated categorically in the Guide to Making Legislation in paragraph 13, on impact assessments:

“The … impact assessment … will need to be updated during parliamentary passage to reflect any changes made to the bill”.


I therefore ask the Minister: why has there been no update to the impact assessment to take into consideration any changes made to the Bill?

If the noble Lord, Lord Lansley, is correct, there will need to be some quite significant changes to the impact assessment, because the cost is all predicated on the streamlined approach that has been presented under the Bill before the Government sought to amend it. The Committee does not need to be reminded that the Government now want a far more competitive, flexible, streamlined procedure, moving from seven systems to three. If it is now the dance of the three and half veils, of “covered” or not covered, and organisations are having to work out which area they are going to fill in, of course there will be impacts that need to be outlined.

--- Later in debate ---

On the amendment before us—I will deal with the rest of the group in the broadest terms—my understanding is that, as a result of frank and useful discussions in the usual channels, there is an understanding that many of your Lordships are unhappy about proceeding at this juncture without further explanation. Without going through each amendment at this stage, given it is likely that many of them will come forward at a later stage—although this remains to be the outcome of ongoing negotiations—I certainly give an undertaking that I will ask insistently that the Committee has the kind of explanation that the noble Baroness asked for on the amendments that the Government have tabled. We will begin on Wednesday with another clump of government amendments. I fully take the criticisms and will ask that a much clearer schedule is put before your Lordships, bit by bit, on each of the matters we are asking you to deliberate on. Indeed, I heard what was said about the dearth of detailed explanatory statements on the matter. We will do better. I will take that concern away.

[Lord Purvis of Tweed (LD)]

My understanding is that the only way this could be done better is for the Government to withdraw the amendments and bring them back with explanatory statements. Explanatory statement cannot be tabled separately, so if the Minister is sincere that the Committee will not face continuing lists of government amendments without explanatory statements, the sensible course of action would be for him to withdraw them and bring them back with explanatory statements so that we can consider them properly.

[Lord True (Con)]

That was, in a sense, the implication of what I was saying. We are debating only Amendment 1 at this stage, but for the avoidance of doubt, if it helps the noble Lord, at the end of these remarks I will beg leave to withdraw Amendment 1. Your Lordships could indeed obstruct these matters, but I will withdraw the amendment and see that we fulfil the undertaking that I have given.

More generally, important questions were asked about definitions. I must say to the noble and learned Lord that, until relatively recently—I use that word because I do not want to define it more narrowly—I was not familiar with the concept of “covered”. However, it has come forward after careful reflection by the Cabinet Office and the Bill and legal teams. It is intended to make the concepts in the Bill clearer to use and understand. I mentioned “covered procurement” in my opening remarks. “Covered” was intended to refer to those contracts that are fully regulated by the Bill’s provisions, whereas “procurement” refers to those contracts that are less regulated but none the less catered for, such as below-threshold contracts and, as the noble Lord, Lord Purvis of Tweed, said, international organisation procurement.

--- Later in debate ---

[Lord True (Con)]

I do not think that, in public remarks that will be recorded for all eternity in Hansard, Ministers should ever agree to the idea that anyone might be confused by the crystalline words that come before the Committee, but I must say that I did not, at first blush, understand these proposals when they were put forward and laid. I understand the objective, and think that both the noble and learned Lord and my noble friend have understood and divined it. We believe that it meets the requirement but, in the light of what your Lordships have said, I am sure that we can reflect on that. I will withdraw this amendment so that we can come back to it.

My advice from legal advisers is that this amendment adequately achieves the objective we sought. As to the elegance of it, I am not going to go into a disquisition of other circumstances in which “covered”—

[Lord Purvis of Tweed (LD)]

While the Minister is reflecting, might he be able to comment today on the legal advice that he has clearly received? He kindly referred to my reference to international obligations, including the TCA. In the legal text of the TCA, “covered procurement” is stated as the area where the TCA and the UK have an agreement. It is unclear whether the definition, and what the Government are seeking to do in this Bill, will have the same meaning as “covered procurement” in the TCA. Can the Minister clarify that point?

[Lord True (Con)]

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

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

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

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

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

--- Later in debate ---

I was very struck and, indeed, appalled at the outbreak of the Covid pandemic that one of the contracts for test and trace was given to a multinational company headquartered in Miami, Florida. It seemed so obvious that knowledge of the ground, local circumstances and where to put your test and trace things was held already by local public health officers across the country. The outsourcing then should probably have been done through local authorities and the services they could provide; giving it to a multinational with very little experience of operating in England was clearly counterfactual, counterintuitive and likely to be grossly inefficient, as indeed it proved. The importance of putting in the Bill that local authorities and consortia of local authorities can operate as these unfortunately named “centralised contracting authorities” is because we want to make sure that this does not end up with Whitehall and Ministers taking yet another large bite out of what used to be local autonomy and local initiative, and so that the Bill gives adequate space for those local contracting authorities and others to be involved as fully as possible.

[Lord Purvis of Tweed (LD)]

My Lords, I shall speak to my Amendment 19 and comment very briefly, because it was a pleasure to follow my noble friend, simply to emphasise the point that he and my noble friend Lord Scriven made about local authorities. I want to add just two other elements of that and combine it with a comment, since we started on this group with the noble Lord, Lord Lansley, about universities. In the case of my former constituency, Heriot-Watt University was part of a number of consortia with other universities and other organisations, which included charitable trusts, research trusts and other groups. Since they became procurement bodies themselves, it would be very useful for the Government to be very clear as to how this Act will consider an institution as a procuring body, including as part of a consortium of which the partners are not covered by this legislation.

On the point about local authorities, I would be grateful if the Minister would clarify for those local authorities that work cross-border. There is the borderlands consortium of local authorities in England and Scotland. In my understanding of how the Bill is drafted, that consortium would not come under the Bill because only local authorities, or local authorities in Scotland that operate on fully reserved matters, would do so. The consortium does not operate on fully reserved matters but it is a single consortium that receives a borderland deal from the Treasury and is a procuring authority. It would be very helpful if the Minister would clarify the status, under the legislation, of the border consortium of local authorities.

The purpose behind Amendment 19 is to develop that probing and to ask for consideration of the treaty state suppliers and the international agreements. What comes under the terminology of international agreements? The noble Lord, Lord Lansley, and I have raised questions on many occasions about what the Government consider to be a treaty for international agreement purposes. I understand entirely that the Government’s purpose behind this legislation is flexibility, but also transparency. I support those, particularly the transparency angle. We therefore need to look carefully at the areas that are exempted.

The noble Baroness, Lady Noakes, raised the point about ARIA; I will not intervene in the mutual relationship between her and my noble friend Lord Fox on the relationship with ARIA, and I know that UK Research and Innovation is not linked with ARIA. However, I found it interesting that UK Research and Innovation is included in our trade agreement with Australia under the procurement chapter by virtue of it being a listed body. If we need to look at which bodies will be included in this legislation, there are exhaustive lists—it says: “This list is exhaustive”—in our trade agreements, which are now in scope of this legislation but which many Members may think are not. For example, at 6.9, UK Research and Innovation is included.

Most interestingly, the Bill excludes Government Communications Headquarters, but it is included in the list of bodies in our FTA with Australia under the procurement chapter. I do not know how they will interact. We will come to this when we come to the elements of international trade, but where does GCHQ sit as regards procurement? We are obliged to cover it under the Australia FTA but we are seeking to exclude it under the Bill. I simply do not know the answer, so I look forward to the Minister clarifying that point.

The amendment on international agreements is to clarify what the Government consider an international agreement. Paragraph 19 of Schedule 2 states:

“A contract awarded under a procedure specified in an international agreement of which the United Kingdom is a signatory relating to … the implementation of a joint project between the signatories to that agreement.”


That could be extraordinarily wide, and if it includes agreements which are not under FTAs it could be enormously wide.

I just need to look at two contemporaneous cases under memoranda of understanding. These are agreements which the Government say are underpinned, with commitments to honour them. One is the Rwanda MoU on immigration—I visited the centre in Kigali two weeks ago. There is procurement that could be under that agreement, whether for the aircraft which have been brought from Spain to fly individuals out there, or indeed the Hope Guest House Ltd, a private limited company in Kigali that is to be the reception centre for these people and which I visited myself. I asked the authorities there: “If it is a limited company, how do I know what the details are—the terms and conditions?” They told me that it was under a one-year rolling contract but I have no idea how it was procured, and the same goes for the British side. This is a joint agreement with joint procurement, and I believe that it should be transparent, but under the Bill the Government are seeking to exclude that.

There are a number of different areas. There are international higher education partnership agreements. Even if the noble Lord, Lord Lansley, is successful with his amendment, it would be rendered useless under paragraph 19 of Schedule 2 because the Government will be able to say that it is under an international higher education agreement. We have signed between 15 and 18 agreements with China on preferential market access, including investments through UK pension funds, which potentially come within scope of this as well. We have an investment partnership with the UAE, the details of which have not been published; I have not been able to find them and the Library has asked the DIT for the text but it has not been forthcoming. However, these are potentially joint procurement agreements. Some may be beneficial; others I look at with a cautious eye. Depending on how they are defined and on how the Government wish to use them, the transparency elements of procurement could be bypassed because of paragraph 19 of Schedule 2. Therefore, I would like the Government to explain.

In closing, because it links to a number of international agreements and has been previously referenced on treaties, I recognise the 24 treaties listed in Schedule 20, but the impact assessment relates only to 20, so I do not know why there is that discrepancy. It would be helpful if the Minister could clarify the discrepancy between the two.

[Lord Coaker (Lab)]

My Lords, it is a pleasure to follow my noble friend Lady Hayman after her remarks. I apologise to the Committee for being a few minutes late; I was unavoidably detained on other business. I also thank the noble Lord, Lord True, for dealing with a really difficult situation with—as we might all agree—his normal courtesy. I think it was the best that could be done in the circumstances; withdrawing government Amendment 1 allowed us to move to this group of amendments. We all appreciate his offer of continuing discussions in the next day or so to consider how we take all this forward. It would be remiss to not start with thanks to the Minister for that, otherwise the Committee would have been a complete and utter catastrophe. As we can see, however, with this group of amendments we have got on to the real purpose of the Committee, which is to get to the real detail, as seen in the various contributions made by all noble Lords. All the amendments put forward have asked very reasonable questions, which seek to clarify the Government’s intentions. I shall certainly make those points in the few minutes that I speak for.

I start by saying that I was really interested in the amendment of the noble Baroness, Lady Noakes, because it goes to the heart of the issue. You can read “pecuniary” in all sorts of ways. I looked it up with the help of my noble friend Lady Hayman and it has to do with money, so I was quite pleased to read that—from a non-legislative point of view—because I thought it meant that it was about the supply of the contracts, the pecuniary interests would not matter and it was a “standards in public life” type of approach, but of course it is not. The amendment of the noble Baroness, Lady Noakes, has clarified that for me. What “pecuniary” means in this context is a really interesting point: why are the Government including it and why would the amendment of the noble Baroness, Lady Noakes, not be an improvement? Again, the details of some of these amendments are really worthwhile points to look at.

I wanted to raise some of the points that the noble Baroness, Lady McIntosh, started to get to in the debate on whether Clause 2 and Schedule 2 should stand part. There is also the question of where Schedule 1 takes us. The noble Lord, Lord Fox, will be interested in this, having asked who will police this. The Government use the term “estimated value” in Clause 2 and, to be fair to them, that is very important for this aspect of a public contract. Clause 3 deals with how estimated value is worked out; then, in Schedule 3, it is done by regulation. Schedule 3 lays out how the estimated value may be set, so I will not go through it. What I could not find out—a point also made by the noble Lord, Lord Fox—is who ensures that it is properly done; in other words, that the estimated value is a proper estimated value and that the system laid out in Schedule 3 works. If I understood the Minister, he said that it is a matter for the Minister—a matter for the Crown. Could he just clarify who polices this? Who ensures that the estimated value is indeed a proper estimated value? That would be helpful to the Committee.

--- Later in debate ---

Amendment 19 in the names of the noble Lords, Lord Purvis of Tweed and Lord Wallace of Saltaire, which seeks to remove sub-paragraph 19(b) of Schedule 2, would seriously impair the UK’s current ability under the Public Contracts Regulations 2015 and the Defence and Security Public Contracts Regulations 2011 to conduct joint projects with our international partners, particularly in the field of defence. I will write to noble Lords on some of the particular points made in relation to government communications; defence and security matters will partly be covered by my noble friend Lady Goldie, but obviously they will understand why I will do that.

[Lord Purvis of Tweed (LD)]

I am grateful. Just so that the Minister writes the correct letter to me, I am fully aware that sub-paragraph 19(a) relates to agreements about

“the stationing of military personnel”.

However, sub-paragraph 19(b) is so broadly drawn that it is not directly linked to military agreements. I hope that the Minister does not write to me concerning anything to do with military procurement because that is absolutely not what I raised. My concern about sub-paragraph (b) regards the other agreements that are not military.

--- Later in debate ---

[Lord True (Con)]

I will certainly reflect on anything that is said in Committee. “Combined authority” has a particular meaning and understanding. Local authorities can procure things together without being a combined authority; perhaps the noble Lord, being a good Liberal Democrat, might like to propose a federalised approach. I will take away the point he made. I was going to say that I agree with him and the noble Lord, Lord Scriven, that it is correct that local authorities can band together to form consortia to undertake procurements; that is something we wish to encourage. I will look into the particular case of border lands that the noble Lord—

[Lord Purvis of Tweed (LD)]

It is a federal question that I am asking, about states that border combined authorities.

[Lord True (Con)]

I am not sure that the First Minister is looking for a federation.

Where a procurement is being undertaken by one or more local authorities that are in the business of carrying out procurement for others, as when they form a consortium to undertake several procurements over a period of time, those authorities would constitute whatever we call it—a centralised procurement authority, for the purpose of the Bill—without the need for the amendment. Conversely, where a group of local authorities come together to undertake joint procurement on a one-off or ad hoc basis, they are entitled to do that as joint procurement under Clause 10(4)(a).

There are other aspects in relation to local authorities. The Government have a clarifying amendment in the megagroup that comes up next, which I hope will also give some reassurance to noble Lords opposite that we want freedom for local authorities—although they will have to have regard to the priorities and national procurement strategy, as any other body will. Ultimately, they will remain accountable to their electorates for their own procurement decisions.

I was asked about how integrated care boards fit into the Bill. I understand that we are still in discussion with the Department of Health to agree what matters are within the health and care procurement rules. This will be debated later on in the Bill; I hope to come forward with more clarification on that.

Finally, a lot of general matters were raised relating to Clause 2, not only by my noble friend but by the noble Lord, Lord Coaker, opposite. My note-taking was running out a bit but I will obviously pick up as much as I can of the remarks and write further.

Procurement Bill [HL]

Lord Purvis of Tweed Excerpts

Committee stage
Wednesday 6th July 2022 Grand Committee

[Lord Purvis of Tweed (LD)]

My Lords, I shall add some questions to those posed so far on this group. Before I do, I thank the Bill team for the technical briefing this morning that I took part in remotely and for the further information that the Minister promised and which was provided and circulated with the explanatory statements. They were helpful. Of course, they do not answer all the questions, but that is the purpose of Committee.

Overall, it begs the question as to where we stand on the overall proportion of procurement that would be under covered and non-covered areas, and what is now under exempted areas. The Minister rejected my call for an updated impact assessment. At the moment, we have no information as to what level of procurement we are dealing with in these new areas. It would be helpful if the Minister could say what proportion of the procurement is now likely to be within the covered, non-covered and exempted areas.

With regard to ownership and persons, I posed a question to the technical team this morning, so I hope they have had time to provide some information to the Minister. There seems to be an assumption in the drafting that contracting authorities are either public or private bodies, but it is less clear on the other areas within the broad public sector, where there are, effectively, trust models for the delivery of services. These do not fall neatly into the category of a public or private body. Indeed, I am aware of procuring bodies that delivered services in the Scottish Borders, my former constituency area, that were hybrids between purely public authority bodies, charitable bodies, pension funds and public interest vehicles. I would be grateful if the Minister could confirm whether Amendment 11 will cover all these areas. If it does not, there will still be gaps when it comes to some of the consortia which are both traditional centralised bodies, as we discussed on Monday, and those that are other trust models.

I turn now to my second question, which I also posed to the technical team—to be fair to them, I got some form of answer. It relates to contracting authorities acting jointly when one is English and one is Scottish. What legal framework will they be operating under? The Bill team—I hope I relate this correctly; they have no right of reply, so I hope I am fair in what I say —noted that, later in the Bill, there are regulation-making powers to cover these areas. However, my concern is that, presumably, we would not be expecting regulations to be brought forward to suit individual contracting authorities acting jointly where one is Scottish and one is English. This is a slightly different point from which the Minister said on Monday he would write to me, because it relates directly to this amendment. I did not receive a letter clarifying these cross-border issues. The Minister may say that he was rather busy—

[Lord True (Con)]

The noble Lord has generously acknowledged, as others have, that the officials have been extremely busy. There will be a response to the noble Lord’s question, as I undertook. With respect to the officials, it is unreasonable to complain that a letter has not been received, given all the other activities going on. I repeat the undertaking. The noble Lord will receive a letter, but I must defend my officials.

[Lord Purvis of Tweed (LD)]

My Lords, I hope the Minister will reflect on his comments. At no stage did I criticise officials for not receiving a letter. This is a ministerial responsibility. A Minister gives an undertaking to write to a Member in Committee. A Minister brings forward and moves amendments in Committee which are pertinent to the issue I raised when the Minister said that he would write to me. I was not criticising any officials. If any criticism to be laid, it is against the Minister. I simply said that, in the absence of the letter he promised to send me, I am asking these questions for clarification. That is reasonable.

On exemptions, there has been some reference to legal services. I understand the point that has been raised about making sure that there is a distinction from Scottish legal services as appropriate, and I certainly support the Government doing that. However, my understanding is that, for some of the treaty suppliers, there are obligations under some of the treaties on the mutual recognition of professional and legal qualifications. My understanding is that the exemption for legal services under this Bill will cover those other areas where the mutual recognition of professional qualifications in carrying out certain legal services will also be excluded. I understand that a body would be unable to procure legal services that are separate from those exempted, but they are then covered in other areas of professional qualifications. This will leave certain gaps in our treaty obligations.

I reviewed the Australia agreement on the carve-out on legal services. It is broadly the same, so I understand where the Government are coming from as far as these exemptions are concerned, but it is not exactly the same. Perhaps the Minister could give some further explanation as to what is likely to be allowed under the provision of legal services by certain providers of legal services that have mutual qualification recognition, because the position on legal services is still uncertain. If the Minister could respond to those points, I would be grateful.

[Lord Coaker (Lab)]

My Lords, I start by thanking the noble Lord, Lord True, those who have been working with him and the officials for the briefing we received this morning and for listening to the anger, frankly, that there was on Monday about the situation. We were where we were; we are grateful to the Minister for doing what he could to degroup the amendments and sort things out as best he could. Clearly, there are still a number of issues, and many of us are still struggling to put together the various mountains of paper we have to try to make sense of it.

I congratulate the noble Baroness, Lady Noakes, on her extremely important Amendment 11A. I must say that, in my reading of Schedule 2, I had not picked that issue up, which shows part of the problem—I know that the Minister accepts this—of not having enough time. The noble Baroness’s point was on decisive influence and what that means. As the noble Lord, Lord Fox, said, the definition of particular words and phrases bedevils us at the present time. I pray in aid because, later on, I will point out one word in a couple of phrases that I think makes all the difference; I hope the Committee will bear with me and recognise that I am not being trivial—changing one word would make a significant difference to the meaning in the Bill. As well as pointing something out to us, the noble Baroness has made an extremely important point about what “decisive influence” means in paragraphs 2(2) and 2(3) of Schedule 2.

I would add to what the noble Baroness said. This is really important because is it not only

“a decisive influence on the activities of the person”;

it is also “directly or indirectly”. You then really get into the question of what on earth it means. To be frank, when you get into “decisive influence” and “indirectly”, it becomes extremely difficult. Again, I thank the noble Baroness. Like her, I look forward to listening to the answer the Minister gives with respect to that.

I agree with most of the remarks made by the noble Lords, Lord Purvis and Lord Fox, and others. I have decided not to read out my notes, because I want to try to get to the heart of this for the benefit of those who read our proceedings. If I get this wrong, the Minister will need to correct me. We need to understand where we are and what is happening.

My understanding is that the current procurement regime—not the regime envisaged by the Procurement Bill—operates under the existing Public Contracts Regulations 2015. Because we left the EU, the original Procurement Bill sought to transpose the 2015 regulations into British law. Unfortunately, in doing that, the Bill made a series of errors, and in particular around the Teckal exemption—however it is pronounced; I do not have the same mastery of languages as the noble Lord, Lord Moylan. That exemption was not actually in the original drafting. The Local Government Association and all the other bodies were horrified—from what I have seen of the statements they have made to the Government—because it meant that many of the things they were able to do under the 2015 regulations with the Teckal exemption would no longer be allowed and they would have to change their procurement processes. I apologise to the noble Lord, Lord Moylan, who gave the very good example of the transport initiative, of which he was proud, but the LGA and other bodies were worried that these sorts of arrangements would not be operational in the same way as was drafted in the original Procurement Bill.

The Committee will correct me if I am wrong, but this is the million-dollar question for me, and the reason I abandoned my notes: do the Government amendments in this group, led by Amendment 10, mean—as the noble Lord, Lord Moylan, other noble Lords, the LGA and many other organisations which have made representations to us are concerned it does—that the 2015 regulations have been transposed into the amended version of the Bill, along with the Teckal exemption to those regulations? That is what people will be looking for, because British law, as it will stand when this Bill becomes an Act, will mean that they can operate the various arrangements that they have either vertically with an entity in themselves, or horizontally with other local authorities or bodies.

If we look across the country, we see that in all the areas in which we live—including, I presume, Wales; I am not sure about Scotland, about which the noble Lord, Lord Purvis, may wish to say something—there are hundreds upon hundreds of models of procurement that have been adopted and worked on to deliver services in the way that a local authority, body or entity has decided to follow. The Minister will know this better than me, because of his experience. What they will be looking at is whether the Government’s amendments mean that their concerns have been met. That is why I decided to put down my amendment. I cannot debate law as well as many other noble Lords, but if I were someone from the outside looking at this, I would ask whether this means that I can carry on procuring in the way that I have been able to procure previously. That was my concern with the way that the Bill was originally drafted. That is the million-dollar question for the Minister.

--- Later in debate ---

[Lord True (Con)]

My Lords, I am grateful to those who have spoken. Of course, this is Committee in your Lordships’ House, the whole purpose of which is to probe, challenge, ask and seek greater definition. I make absolutely no complaint about that; indeed, I welcome it. The issue is how and when most effectively we can give the appropriate response. I and my officials will always try to do that in the best possible way and the best possible time to enable your Lordships to do your work. That is the aspiration. I have no doubt that I will fall short of that aspiration and that I will be caned for that.

I will speak to Amendment 11A, which was tabled by my noble friend Lady Noakes, in a moment. First, I have been asked questions on a number of matters, which I will try to address. I fear that the exemption list was drawn up before my time, but I am advised that it was drawn up in consultation with various stakeholders with the appropriate interests covered. Analysis of the exclusions in WTO-Government procurement agreements and responses that the Government received to the initial Green Paper were the leading informatives, as I understand from those who were involved at that stage. However, I will be happy to engage with the noble Lord outside the Committee between now and Report if there is a particular item in Schedule 2, or if he wishes to address it in an amendment on any of those exclusions. That is where we are coming from.

I will deal with a couple of other things because I want to get on to the matters that largely affect local authorities and the amendments. The noble Lord, Lord Purvis of Tweed, raised a question—this is also germane to the point made by my noble friend Lady McIntosh—about the nature of the relationship with, say, the Australia agreement, which he cited. I understand that he raised that in a briefing session this morning in relation to postal services. Indeed, that would not be a defence matter. My officials agreed to clarify this. Since it has been raised, this is the point where we are. By the way, no one should Pepper v Hart anything that I am saying at this stage because this is an exploratory Committee stage and it is important both in correspondence around Committee and in engagement that we get to the right point—I totally agree with the point that the noble Lord, Lord Fox, made about the importance of definition, which is absolutely fundamental.

This is a complicated, technical matter, which requires us to understand both the Bill and how the Australia agreement is structured. However, I am advised that we are satisfied that the Bill is not required to cover postal utility activities. To determine whether a utility is covered by the Bill, one has to look at both the entity and the activities that it is carrying out. Utilities are defined as public authorities, public undertakings and private utilities that carry out utility activities. Utility activities are defined as activities of the type set out in Schedule 4—gas and heat, as well as transport, which we discussed briefly on Monday. It is true that the Australia agreement does not define the terms “utilities” or “utility activities”. However, it works on a similar basis. The agreement covers only the utility activities covered in section C of our market access offer and only for the entities set out in section C.

In the Australia agreement, section C of our market access schedule provides that only certain transport services are utility activities and that the only entities that are covered are public utilities. Section C does not include the postal sector or private utilities. Postal services in the Australia agreement are included as services only in section E. This means that those entities only are covered by the Australia agreement in annexes A, B and C of our market access schedule, which does not include utilities in the postal sector that are covered for the postal services in section E that they procure—for example, a local authority procuring mailshot services. It does not mean that entities such as Royal Mail that operate a private postal service are covered. That is the current advice that I have on that matter; I am sure that my officials would be happy to explore it further with the noble Lord.

[Lord Purvis of Tweed (LD)]

I am grateful to the Minister for that and for answering at this stage a question that I have not yet asked about postal services. Our understanding is that that would be in the group with government Amendment 24 on the expansion of utilities. We will be raising some of these issues, but I take note of what the Minister said. The main thrust of my questions in this group were about the joint groups and the different types of ownership for them, but I am grateful for what the Minister has said so far.

--- Later in debate ---

[Lord True (Con)]

My Lords, I hear what the noble and learned Lord says. Those remarks might also be addressed to the First Minister in Scotland. I expressed regret—I think it is shared across the Committee—that the Scottish Government have not wished to take part in the constructive way in which the Welsh Administration have. We have had good co-operation with the Welsh Administration, and that has had an impact on the Bill. Clearly, if the policy changes, then a Bill can be amended, but I am about to reply to a series of complaints about the Government taking all sorts of potential regulatory powers to change this, that or the other, and that would be quite a substantial secondary power to take. It is regrettable, but that is the position.

[Lord Purvis of Tweed (LD)]

Further to the point from the noble and learned Lord, I am less convinced at the response that this is discretionary as to the choice of Scottish Ministers. I understood that these provisions were for public passenger transport services that do not cross the border into Scotland. Therefore, these are for the provision of public transport services that begin and end in England.

If that is the case, they are within the scope of this legislation. If they are public passenger transport services which begin and end within Scotland, they would be under Scottish legislation. Therefore, this would not apply and the appropriate authority would not be Scottish Ministers. Would it not be better if the Bill simply stated where the public passenger transport services are? The area of concern for me is cross-border public passenger transport services, for which, under the 2016 legislation, there was further ministerial devolution to allow some form of regulations to be passed on cross-border public transport services. I declare an interest because I use them every week.

[Lord True (Con)]

I hear what the noble Lord says. I come to this House and I am asked to respect the position of the devolved Administrations. The position of the devolved Administration in Scotland is that they do not wish to be part of this legislation, so I am caught. If at a later stage, or even at this stage, the noble Lord wishes to put forward an amendment to change “appropriate authority” to include the Scottish Government, no doubt we can debate that matter, but the position now is the one I set out and I have given the explanation that is the policy decision of the Scottish Administration.

[Lord Purvis of Tweed (LD)]

We are making law so, for the record of the Committee, is the Minister saying that public passenger transport services under paragraph 17 of Schedule 2, for the exempted contracts, are public passenger transport services that begin and end in England? Is that correct?

[Lord True (Con)]

My Lords, the noble Lord is right to raise the issue of cross-border services. We will come to that later in the Bill. I am not excluding discussion of cross-border. It is an overall policy position that I am stating. We will come to the cross-border issue later in the legislation. I do not want the noble Lord to think that we are having a kind of Sicilian motorway approach, where the Mafia money ran out. I fully understand where he is coming from on that. I was really replying on the broader point.

Time runs on and I must get on to the specific and very important points made not only by the Delegated Powers Committee but by noble Lords who have tabled amendments. I will try to persuade the Committee that the amendments are unnecessary and that the strictures of the Delegated Powers Committee were strong. I heard the word “a scorcher”, but perhaps I do not necessarily need that. I heard the remarks from all sides on that. We will carefully consider them, notwithstanding what I say now. Obviously, it believes it is a reasonable position, but we will consider those remarks.

Amendment 18 would remove paragraph 17 of Schedule 2, which has been alluded to. The effect of this would be to remove an exemption for certain public passenger transport services that exists in our current procurement legislation. The exemption exists and it is necessary as procurement for such services is governed by a separate regime operated by the Department for Transport. It is important that the Bill does not impinge on that separate regime and that the exemptions under the Bill fully align to ensure that public passenger transport services are regulated by the correct regime. There is no intention to exempt public passenger transport services beyond those currently exempt and governed by the Department for Transport regime.

Amendment 21, tabled by the noble Lord, Lord Wallace of Saltaire, seeks to remove a provision that exempts concession contracts for air services provided by a qualifying air carrier. Removing this would bring those contracts within the scope of the Bill, which would be a fundamental change to the existing position.

Air services are separate markets driven and operated by the private commercial sector. The public sector does not generally procure or intervene in these services. Given the distinctive features of the air transport market, and the state’s historical limited intervention in it, it would not be appropriate to bring air transport within the scope of the mainstream procurement rules. However, I assure noble Lords that the power is limited to specifying the meaning of a “qualifying air carrier”, which is, in essence, someone licensed under the existing regime for air carriers. This power is not wide-ranging and is needed only to ensure that the definition refers to the correct regime. Therefore, I ask noble Lords not to press Amendments 18 and 21.

--- Later in debate ---

[Baroness Scott of Bybrook (Con)]

My Lords, I start by clarifying what utilities are covered in the Bill. Utilities are defined in it as public bodies, public undertakings or certain private undertakings that carry out utility activities. Public undertakings differ from public bodies in that they do not have functions of a public nature; their activities are more economic and commercial in nature. While it is no longer one, before the Government sold their shares in 2015 Eurostar International Ltd was a public undertaking.

The Bill covers private utilities only where they have been granted a special or exclusive right to carry out a utility activity. These are rights that have been granted by a statutory, regulatory or administrative provision and that substantially limit other entities from carrying out those activities. Rights are not special or exclusive when granted by following a competitive procedure or where the opportunity was adequately publicised and the rights were granted on the basis of an objective, non-discriminatory criterion.

Private utilities which enjoy “special or exclusive rights” are effectively in a monopoly position and therefore they could, however unlikely it is, engage in preferential treatment that, for example, favours their own affiliates or strategic partners and discriminates against other suppliers bidding for the contracts. The Bill applies to utilities only where they are carrying out the utility activities set out in Schedule 4: specifically, gas and heat, electricity, water, transport services, ports and airports, the extraction of oil and gas, and the exploration for or extraction of coal or other solid fuels.

The two government amendments in this group are minor and technical in nature. Amendment 20 to Schedule 2 is consequential on government Amendment 231, which amends Clause 35(6) to ensure a single definition of utility is applied to the whole Bill. In Schedule 2, paragraph 28(2) is therefore no longer required. The definition at Clause 35(6) is exactly the same as that contained in the deleted sub-paragraph (2).

Amendment 24 amends Clause 5(1) to define a utilities contract as a contract

“wholly or mainly for the purpose of a utility activity”.

The addition of “wholly or” is to reflect the reality that a utility contract can include solely or predominantly utility activities. This amendment to the terminology ensures consistency with the approach to mixed procurement used elsewhere in the Bill; for example, with Clause 8(1) on light touch contracts, where the same principle applies. I beg to move.

[Lord Purvis of Tweed (LD)]

I am grateful for the Minister’s explanations. Her colleague the noble Lord, Lord True, previewed some clarification regarding the Post Office, so perhaps she was forewarned. I have two questions for clarification, further to what she said.

The more specific question relates to freeports, which I raised in the technical discussion this morning. I would be grateful if the Minister could respond now, but if not I would be happy if she does so in writing. There are a number of areas of government policy—I am not debating the rights and wrongs of this—which have activities linked to the provision of utility services but which are not directly, wholly or mainly a utility service. I am concerned, for example, about whether the more commercial activity of freeports, which are government policy and have the benefit of being linked with a utility but do not provide utility services, may well be exempted. That would not bring about the level of transparency in the thresholds that I believe there should be. I am still scratching my head about the status of freeports.

The element raised earlier by the noble Lord, Lord True, on postal services is concerning. I am particularly interested in the status of Post Office Ltd. The noble Baroness, Lady McIntosh of Pickering, raised Parcelforce. I understand that Royal Mail and Parcelforce have a relationship with Post Office Ltd, and they provide different services. I understand that the Post Office is not considered a Schedule 4 utility, but clarification on whether it is covered under the public undertaking elements would be helpful. I ask because postal business of the Post Office is included under the procurement chapter, referred to by the noble Lord, Lord True, and annexe 16A of the UK-Australia agreement, as are postal services, which relate to letters, parcels, counter services and other such services. The classification under the WTO which the annexe uses links with the pick-up, transport and delivery services of letters, newspapers and journals, whether for domestic or foreign markets. I am not entirely clear about the status of that when it comes to Royal Mail services. They are covered within the procurement chapter of the Australia agreement, but I am not sure of their status in this Bill.

This speaks to the wider point that we are now in the realm of having to look at each of the 24 agreements in the schedule. Any authority or likely bidder for any of these works will have to study all these FTAs and all the procurement chapters, in addition to the EU-UK TCA, this legal framework, and the Scottish and Welsh ones. At the very least, we are now replacing one system with 25—or more likely with 27. That means it is not a more efficient way of covering it.

Finally—I asked earlier, because it is not clear in the impact assessment, and Ministers might write to me on this—now that the Government are clarifying their position in the Bill on those that are covered, not covered and the exemptions, I would like to see an update on the information about the likely number of contracts and the values in all these categories. I would be grateful for that information and for clarification on the Post Office.

Procurement Bill [HL]

Lord Purvis of Tweed Excerpts

Committee stage
Monday 24th October 2022 Grand Committee

[Baroness Neville-Rolfe (Con)]

A chilling effect on corruption is obviously positive but a chilling effect on people being prepared to engage in government procurement is not, particularly smaller suppliers, which might be put off by some of these rules. That is why we brought in Schedule 6, which will bring a certain clarity. There may be some further discussions to be had on Schedule 7 and exactly how it works.

[Lord Purvis of Tweed (LD)]

I too welcome the Minister to her position. My question relates to a later group in which I have an amendment. Given that the Bill will allow for there to be no discrimination against any treaty-state supplier, how will a contracting body or procurement body operate under Schedule 7 for any of the suppliers from any of the countries with which we have a trade agreement? This comes back to the point made by the noble Baroness, Lady Noakes. It is not simply the case that businesses are going to have to work through Schedule 7 to satisfy all the grounds for this; they are going to have to do it with every single country with which we have an FTA for the suppliers coming from them. How is that making the job easier?

[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.

--- Later in debate ---

[Baroness Neville-Rolfe (Con)]

I look forward to getting delayed in the Lobby in the next Division.

I am aware of the concerns regarding Hikvision and other Chinese technology companies; we take these concerns extremely seriously, as the noble Lord knows. We are taking action in the Bill to introduce a new ground for exclusion, specifically to address situations where a supplier poses a threat to national security. The new exclusion ground allows a contracting authority to reject bids from suppliers that the authority considers pose a threat to the national security of the United Kingdom.

It is the long-standing policy of successive British Governments that judgment as to whether genocide has occurred is for a competent national or international court. It is not for the contracting authorities. Genocide is a crime and, like other crimes, whether it has occurred should be decided after consideration of all the evidence available in the context of a credible judicial process.

This has been an important debate. I have learned a lot but, for today, I respectfully request that this amendment be withdrawn.

[Lord Purvis of Tweed (LD)]

I would be grateful if the Minister could clarify a little her argument as to why organ trafficking—which is prohibited under the UK’s statute book—cannot be mentioned in Schedule 6 under the mandatory exclusion grounds. Under labour market, slavery and human trafficking offences, there is a fairly comprehensive list of UK domestic offences that are mandatory grounds. I do not see why that list cannot be added to, as I cannot see where the ethical grounds are included within Schedule 6 on the mandatory grounds.

Can the Minister also clarify why, in Schedule 7, on discretionary grounds, those offences are included for prevention orders? The Government seem to be suggesting that for a company that is subject to prevention orders for these heinous crimes—or could be subject to them, if it were a foreign supplier—this is simply discretionary. A contracting body would have to make a judgment itself as to what it considers would be the likelihood of a supplier meeting the threshold for a prevention order, rather than an offence. That does make any sense to me. I would be grateful if the Minister could address those two points.

[Baroness Neville-Rolfe (Con)]

I will need to take the noble Lord’s first point away and look at it. His explicit point is that there is a bit of legislation, so why do we not refer to it? His second point is tied up with how this discretionary schedule works and how we define “professional misconduct”, which, in our interpretation, includes ethical issues. I thank him for raising these issues again.

[Lord Purvis of Tweed (LD)]

I would be grateful if the Minister were willing to consider this. It is not about the ethical point. It comes under paragraph 1 of Schedule 7, which is headed “Labour market misconduct”. Sub-paragraphs (a) to (d) specifically refer to slavery and trafficking prevention orders and trafficking and exploitation prevention orders. If a supplier is considered to be acting in a way that would satisfy a prevention order in the UK, it would be a discretionary exclusion ground rather than what I consider it should be: a mandatory exclusion ground. I am happy for the Minister to reflect on it and write if she cannot answer today.

[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.

--- Later in debate ---

[Baroness Neville-Rolfe (Con)]

I will have a little more to say about this later on, so why not let me finish? If I do not answer the noble Lord’s questions, we will try to get at what is needed.

Amendments 477 to 480 seek to examine why government departments have been excluded from the appropriate authority’s investigatory powers. The definition of “relevant contracting authority” in Clause 96 is in recognition of existing governance. Ministers already have the authority to investigate government departments without the need for statutory powers; I think I have said that already. There are also established routes for co-operation with investigations.

Amendment 477A was tabled by the noble Baronesses, Lady Thornton—it is good to see her in the Committee—Lady Hayman of Ullock and Lady Bennett of Manor Castle, and the noble Earl, Lord Devon. Amendment 482 was tabled by the noble Baroness, Lady Noakes. These amendments would expand the scope of the statutory oversight powers beyond compliance with the Bill, straying into areas of policy. The scope of the statutory powers provided by these clauses has been carefully drafted to maintain the boundary between law, which must be adhered to, and policy, where some leeway is allowed in terms of its implementation.

Expanding Clause 96 and/or the Section 97 recommendations to include social value, as well as considering how contracting authorities have chosen to meet obligations to have regard to policy and principles, would blur that boundary and start to erode the autonomy of contracting authorities, which we recognise are best placed to make policy implementation decisions that are appropriate for their business. It would also move the statutory regime away from objective and measurable concerns into more subjective areas of debate, which could impact the effectiveness of the oversight system. We believe that the scope of Clauses 96 to 98 creates a proportionate, effective and compelling incentive for improvement. It is worth noting, however, that the drafting of Clauses 96 and 97 does not prevent the Minister from making observations regarding a contracting authority’s policy implementation. Policy guidance can indeed continue to be provided to contracting authorities.

Non-statutory procurement policy notes, which we have discussed before, are currently released to guide contracting authorities. In the new regime, under Clause 98, statutory guidance, which may be published as a result of investigations, can also address matters of policy. Contracting authorities will be required to have regard to any guidance released under Clause 98; I think this helps to deal with the social value issue. The removal of Clause 97(3) would result in the appropriate authority having the power to intervene in specific procurements.

The restriction in Clause 97(3)(c) ensures probity of the procurement by, for example, preventing a Minister of the Crown from using Section 97 to exert influence over which supplier is awarded the contract. That is an important point. To remove this restriction would be concerning to contracting authorities and suppliers alike.

Finally in this group, the noble Baronesses, Lady Thornton and Lady Hayman, and the noble Lord, Lord Coaker, tabled Amendment 486A. This seeks to stipulate that the expertise of SMEs, voluntary organisations and social enterprises is accessible to an appropriate authority that is conducting investigations under Clause 96. The PRU will be managed and delivered by a small, experienced team of civil servants based in the Cabinet Office, supported by a panel of experts, which can be consulted regarding investigations and any resultant Section 97 recommendations and guidance under Section 98. The Cabinet Office aspires to provide perspectives from procurement experts from across the Civil Service, local authorities and various types of private organisations, including SMEs and VCSEs, to benefit the oversight regime.

However, it should be recognised that having a panel which includes external procurement professionals is dependent on the availability of suitably qualified individuals and the ability to manage any potential conflicts of interest. I am therefore unwilling to make a legislative commitment of the kind proposed. However, the establishment of the panel will be transparent, and appropriate documentation will be published in due course, including on the process for appointing members. It seems to me that this is an important error, which is why I make that point.

[Lord Purvis of Tweed (LD)]

Can the Minister clarify whether it is the Government’s intention that the PRU will be an appropriate authority, so that panel members themselves will have legal powers under Section 96? If not, I am really confused as to what legal powers the panel will have when it comes to calling for documents, and what duty will be on other contracting authorities to provide the panel with any information at all. At the moment, it does not look as if the panel is considered to be an appropriate authority, so it will not have any other legal powers under Part 10.

--- Later in debate ---

[Baroness Neville-Rolfe (Con)]

We do have a social value Act; I think the answer is—subject to correction—that social value features in the NPPS, the policy guidance note, and that failure to have regard to the NPPS is challengeable via judicial review rather than by suppliers for breach of statutory duty under Part 9 of the Bill. That is more appropriate as the NPPS will inform procurement strategy, and failure to comply should not result in suppliers being able to seek compensation from the public purse in respect of an individual procurement. There is quite a lot of complication in that area, but that is the approach. There is a social value Act, but obviously I will listen to what has been said today.

To return to the PRU, the unit will exercise powers on behalf of an appropriate authority. The panel will consult the PRU when appropriate and, if the Government set up a panel, as Governments often do—we have various panels in different departments that I have been involved with, and in my experience they tend to endure; certainly this one will be useful—the PRU will make recommendations to the Minister, who is the appropriate authority and will make the final decisions. That seems to be the right approach constitutionally.

[Lord Purvis of Tweed (LD)]

I am grateful for that response. To be clear, will the panel be the investigating body?

[Baroness Neville-Rolfe (Con)]

No. The PRU, a Civil Service unit, will be the investigating body, which will consist of experienced people of the right kind. The panel will advise that body.

[Lord Purvis of Tweed (LD)]

I am grateful, but Clause 96 says the “appropriate authority may investigate”. The Minister has been referring in this short debate to “investigations” with regard to the panel. I am grateful that she has clarified that it will simply be an advisory group, not an investigatory group, and will not itself have the legal powers to seek documents. I am therefore not entirely sure what the PRU will do other than what existing civil servants do, which is to advise Ministers.

[Baroness Neville-Rolfe (Con)]

We have put together this whole new system of procurement, which includes various checks and balances. Panel members will be available for the procurement review unit to help regarding investigations and the unit’s work. Their reports and recommendations will help with moving forward on procurement and the complexities of this change of the law. Their advice can be published, and we will be able to reference the assistance that the panel has provided. That is the approach that we are proposing following a process of consultation. The PRU is central. I am sure we will revert to this issue.

Procurement Bill [HL]

Lord Purvis of Tweed Excerpts

Committee stage
Wednesday 26th October 2022 Grand Committee

This amendment is to get confirmation from the Minister that all such agreements and all such additions to Schedule 9 would be in relation to international agreements laid before Parliament under CRaG. I beg to move.

[Lord Purvis of Tweed (LD)]

My Lords, I support the noble Lord’s endeavours. He and I have debated with Ministers on many occasions the interaction between the CRaG process, our international negotiations and the regrettable times when there has been, to some extent, circumvention of that approach. Therefore, I am glad he has put forward his amendment to seek clarification, as he outlined.

I have Amendment 441 in this group, which is a probing amendment to test a little further the Government’s thinking about the interaction with treaty state suppliers. It is my understanding that the countries in the schedule are only those with which we have an agreement where there is a procurement chapter or some procurement elements. It has not entirely been spelt out; I will be grateful if the Minister can confirm that this is the case.

When I looked through those countries, I noticed that there is not a single country from Africa in any of these arrangements. It may be that none of the EPAs we have rolled over have procurement chapters. The noble Lord, Lord Lansley, asked a question, and I ask the Minister whether that is the case. For example, in the SADC agreement, we have a chapter for co-operation which may lead to formal procurement agreements. I will be grateful if the Minister can simply clarify the reasons why those countries are in Schedule 9 and others were left out. It may lead to a couple of jarring interactions on the approach, but I am sure the Minister will be able to clarify that point.

My second question relates to our debates on the interaction between the UK system now, including guidance, and treaty state supplying nations. In a debate on Monday, I asked questions relating to exclusions. For example, on human trafficking and slave labour, why is it only a discretionary ground if a supplier would have met a threshold of having a prevention order, whereas if they had met the threshold of a conviction, it would be a mandatory exclusion ground? We in the All-Party Group on Human Trafficking and Modern Slavey have lobbied hard to ensure that, where there are serious allegations of modern slavery, forced labour or human trafficking, there are mechanisms that UK purchasing bodies and supply chains can automatically trigger. This could bring in some grey areas. I do not believe that is the Government’s intention, but it could be an unintended consequence, especially when it comes to very large frameworks and supply chains within those countries.

I will give an example regarding one of the countries in this list, Colombia. We have debated the human rights situation in Colombia with regard to the agreement we have signed. The EU paused the agreement, but the UK did not. There are very few mechanisms in this Bill where we can use the rest of the text of the Colombia agreement on human rights as a triggering mechanism when we procure from organisations or state enterprises in Colombia.

This is just my ignorance, so the Minister might be able to clarify this: are state-owned enterprises in treaty state countries treated the same as private sector companies? I assume they would be, but it opens up a different area of concern for me.

The second linked area is on human rights elements. We have an agreement, and are looking for future agreements, with Israel. The Minister will know that, under the European agreement that we have rolled over, there had been a clear dividing line when it came to the illegal occupation of Palestine. As I understand the Bill, when it comes to technology companies or other companies, it will be very hard for contracting bodies in the UK to consider whether services provided will meet the equivalent criteria for goods imports for those within the Occupied Territories. I would be happy if the Minister would write to me on that specifically, rather than give me a response at this moment.

There is a wider concern regarding this Bill when it comes to how a contracting authority would consider fair competition in procurement. On the Australia agreement, we debated whether produce that came from Australia that was manufactured or reared in different ways and on industrial scales provided unfair competition for UK suppliers. Australia also uses pesticides that are banned in the UK. There is an interesting clause in the Australia agreement that allows for those contracting bodies to

“take into account environmental, social and labour considerations throughout the procurement procedure”.

My amendment lifts text from the Australia agreement and suggests that this should be uniform across all agreements, if that is what the Government consider a gold-standard agreement, as they told us it was. The Australia agreement is broadly in line with what we inherited in the European directive, which had the requirement to take into account social criteria and environmental and labour factors. We have adopted that for the TCA, but it is absent for other treaty state suppliers.

For example, our agreement with Japan has no social or labour considerations in the procurement chapter in Article 10.9. I do not know why—that is a separate issue; we have debated the Japan agreement—but I have not been able to find any consistency in any of the treaty state suppliers. I understand that this Bill will then provide that consistency, and it will either be above or below treaty obligations, which I find curious. For example, unless my amendment is accepted by the Government and the Bill is changed, our legal requirements will be less than our treaty obligations in our Australia agreement. I do not know how that is going to operate when it comes to legal challenges.

It is also potentially the case that there will be inconsistency in application. I simply do not know how contracting bodies are going to navigate their way around this, especially as the Minister says so much is going to rely on guidance. In many of the areas, when it comes to the previous group that we were debating on conflict of interest and on other requirements in the Bill, a contracting authority will have to satisfy itself that the treaty supplier meets all of the criteria in this Bill. I do not know how it will do that when it comes to taking into consideration the other ethical factors or conflicts of interest—what are they going to ask a treaty supplier from Colombia, for example, unless there is some stronger mechanism?

The Minister might also help me with something that has been puzzling me. I do not know why, when it comes to operating no discrimination in relation to treaty state suppliers, that does not apply to Scotland. For Scotland, the Bill provides only that there “may” be regulations which mean that there cannot be discrimination. With the Government’s amendment requiring consistency with the United Kingdom Internal Market Act, which means that there cannot be any internal discrimination, I do not how that is going to interact. The Bill currently allows Scottish Ministers, for example, to say that they will be able to discriminate against certain treaty state suppliers on the basis, perhaps, of the overall human rights record of that treaty state—of which Colombia or Israel may be an example. I do not know, so I am hoping that the Minister might be able to help me with that.

Finally, I am not sure how investigations will be carried out when it comes to treaty state suppliers. Of all the areas we discussed previously regarding the grounds for the investigations by the PRU, which the Minister said will be a non-statutory element that will pursue these, I do not know what powers the PRU will have to secure information from treaty state suppliers. There is no mechanism under this Bill, and unless the provision of information is provided for, as happened in the Australia agreement, I do not know how the PRU will get that information. On all those areas, I hope the Minister will be able to reassure me, because at the moment I am fearful that there is a rather high level of opaqueness.

[Baroness McIntosh of Pickering (Con)]

My Lords, I will speak to Amendment 443A, in my name, to Clause 83. The amendment is, very simply, to leave out

“A Minister of the Crown”,


and its purpose is to remove the power from Ministers of the Crown to make regulations under Clause 83. It may be the case, because this relates especially to the situation in Scotland, that my noble friend the Minister is not able to reply this evening, so I would be very grateful if she could write to me, and I can then share that with the Law Society of Scotland, which has raised this matter with me.

--- Later in debate ---

[Baroness Neville-Rolfe (Con)]

My Lords, this group seeks to deal with amendments relating to treaty state suppliers. There are three minor government amendments either to improve the drafting or to ensure the proper functioning of the clauses, Amendments 438, 440 and 442. As the time is late, I will not go into detail, but I am happy to explain them to noble Lords on another occasion if they wish.

Amendment 436, tabled by my noble friend Lord Lansley, proposes that regulations could be made only in relation to agreements that had been laid before Parliament under the Constitutional Reform and Governance Act 2010. The use of regulations in the Procurement Bill in relation to implementing international agreements is limited to two circumstances. The first is to give effect to the procurement aspects of new trade agreements. For these, the Committee will know that treaties requiring ratification follow the established domestic scrutiny process set out in the CRaG Act. However, not all agreements will necessarily require ratification, and the amendment would place the implementation of such agreements outside the scope of this power. For the agreements that fall within the Act, the Committee will be aware that the Government have previously made commitments in our response to the International Agreements Committee, of which my noble friend is a prominent member, concerning the submission of international agreements to Parliament for scrutiny.

The second set of circumstances is to give effect to any changes to trade agreements over their lifetime. These are envisaged to be small technical changes, such as updating schedules following machinery-of-government changes or modifications to market schedules. In such circumstances, those more administrative matters may not trigger the CRaG procedures and, as such, the amendment would prevent them being implemented using this power. Any such updates and modifications would therefore require new primary legislation to implement, at a huge cost in time and resources. However, I reassure noble Lords that the Government intend to keep the relevant Select Committees aware of any changes during the life cycle of a free trade agreement.

Amendment 441, tabled by the noble Lords, Lord Purvis and Lord Wallace, seeks to provide that a contracting authority does not discriminate against a treaty state supplier if it takes into account environmental, social and labour considerations and indicates in the notice of intended procurement or tender documentation how such considerations are defined. The impact of this would be that a contracting authority could, within the rules, apply environmental, social and labour considerations in a way that breached a treaty state supplier’s entitlement to no less favourable treatment, and that would risk breaching our international obligations. For example, if a contract can be delivered remotely from an overseas base, our obligations to ensure no less favourable treatment for treaty state suppliers mean that it would not be appropriate for a contracting authority to require socioeconomic or environmental criteria that could not be performed from overseas. However, I assure the Committee that the Bill as drafted allows contracting authorities to include social, environment and labour considerations when setting award criteria, as long as they are non-discriminatory.

[Lord Purvis of Tweed (LD)]

I am grateful for that response. I struggle with the first part of what the Minister said because I lifted the wording from Articles 16 and 17 of the Australia agreement. If we have those obligations with Australia, how are we not able to provide that with all the other treaty state suppliers in the schedule where we do not have that language? Japan is lower than that, for example. I am struggling to understand why that would be the case. If she is reassuring me that the power provided by my amendment is already within the Bill, she has basically contradicted her own argument that we are not providing that to all the other countries. I do not understand.

[Baroness Neville-Rolfe (Con)]

The noble Lord’s question was why social considerations are not in the Japan agreement but they are in the Australia agreement. The answer is that every trade deal is unique. The noble Lord is trying to apply one principle to all trade deals.

[Lord Purvis of Tweed (LD)]

That is what the Government are doing. All the other requirements in the Bill are not in the trade agreements with other countries. That is the point that I was making. The Government are introducing a whole set of requirements under the Bill that are not in treaty obligations. I am just trying to say that it would be better if this were consistent.

[Baroness Neville-Rolfe (Con)]

The honest truth is that we seem to have a bit of a disagreement on this; maybe a bilateral discussion would be helpful. The noble Lord, Lord Lansley, also raised a question on which we should have a further discussion; I will write to him on that on the points he was raising. We had advice from the people involved in trade agreements in preparing our response.

[Lord Purvis of Tweed (LD)]

I am very grateful for that offer. I am very happy for it to be multilateral rather than bilateral if that assists the Committee. If the Minister wants to make officials available for the discussion, I will be happy with that, or she may want to write to me in advance of that. It will be helpful if she is able to write to Members before we have a discussion, so that we get a bit more information from the Government first. I will then be more than happy to have the discussions with her about this before Report.