Procurement Bill [HL]

Lord Scriven Excerpts

Committee stage
Monday 4th July 2022 Grand Committee

[Lord True (Con)]

My Lords, it has been an interesting and important debate, which we will reflect on as we go forward in the normal way between Committee and Report. I was asked a couple of definitional questions again, including: what is a public undertaking? Clause 1(2) defines a public undertaking as

“an undertaking that is not a public authority but … is funded wholly or mainly from public funds, or … is subject to contracting authority oversight.”

Public undertakings differ from bodies that are also funded wholly or mainly from public funds, or are subject to public authority oversight but which are considered to be public authorities, in that public undertakings do not have functions of a public nature, which means their activities may be more economic and commercial in nature—these are some of the things we have been discussing. For example, although it is no longer a public undertaking, before the Government sold their share in 2015, Eurostar International was a public undertaking. I am sure that people will examine that definition in Hansard. I will come on to some other points shortly.

On the question of what a private utility is, utilities are public sector bodies—public authorities or public undertakings—that carry out utility activities, or certain private organisations carrying out utility activities, which are the private utilities. The Bill covers private utilities only where they have been granted a “special or exclusive right” to carry out a utility activity. Rights are “special or exclusive” where they have been granted by a statutory, regulatory or administrative provision, and the granting of that right in itself substantially limits other utilities from carrying out those activities—it is a competition issue. This effectively puts them in a position of a natural monopoly and therefore they could, however unlikely it may be, engage, for example, in preferential treatment that favours their own affiliates or strategic partners and discriminates against other suppliers bidding for contracts, which could negatively impact the market and customers. That would not be good for the industry or consumers.

Furthermore, though I listened with great interest to what the noble Baroness opposite said in relation to international agreements, the UK is required by various international agreements to ensure that private utilities do not discriminate against foreign suppliers with rights under international trade agreements, known in the Bill as “treaty state suppliers”, and that they adhere to the rules we have agreed for utilities procurements. This is why the Bill regulates private utilities but only to the extent required by those international agreements and where we consider it appropriate or necessary to make the regime work.

There has been a lot of debate in relation to the extent of coverage; I will come on to that. A philosophical question was posed by the noble Earl, Lord Lytton, and the noble Lord, Lord Fox: what is in and what is out? I am sure that we will debate and discuss this in our engagement as the Bill goes forward. There was a slight difference of opinion. Behind me, I have been hearing, “Everybody out”, whereas, on the other side, the noble Lord, Lord Fox, seemed at one time to stray towards a definition of private delivery of public service. That sounds like the kind of concept that might have led Mr Benn or Mr Corbyn to say, “Let’s have them all in. They provide food, the banks and all these things”. I do not think that one would want to go that far but obviously there is a question of how far; indeed, my noble friends behind me have posed the question of “if at all”.

I was alarmed by what my noble friend Lady Neville-Rolfe said, with her immense experience both in the public sector in Europe and in business. She said that, as it is drafted, she would find the Bill a deterrent to applying for public business. That is certainly not what the Government intend at all.

I will come back to the question of coverage shortly but we have included a number of measures that will reduce the regulatory burden for private utilities. For example, the Bill contains a number of provisions unique for all types of utilities, such as the higher financial thresholds and the utilities dynamic markets, which are available only to utilities. In framework agreements, public utilities can let closed frameworks for up to eight years and there is no maximum term for frameworks entered into by private utilities. In addition, with contract amendments, there is no 50% financial cap on the value of permitted modifications.

Obviously, the Bill seeks to reduce the regulatory burden on private utilities in terms of transparency. The transparency requirements for private utilities are the minimum required by international agreements—that is, the tender notice, the transparency notice in cases of direct award and the award notice. Regarding mandatory and discretionary exclusions, the Bill retains the flexibility under the current regime where the application of mandatory exclusions is discretionary for a private utility. Private utilities are not restricted in the duration of closed frameworks, which is generally four years for non-utilities. The terms of any closed framework are their commercial decision. Private utilities will also not be subject to oversight by the procurement review unit, which we will come to discuss later in the Bill.

I was asked about broadband and drainage. I am not sure that I have an answer on drainage except to say that I always evoke the great spirit of Bazalgette. Schedule 4 sets out that the Bill covers utilities operating in the water, energy and transport sectors that are regulated in our international trade agreements to minimise the burdens on utilities. Broadband is not covered by those trade agreements so we have not chosen to regulate public or private utilities in that area.

In relation to that, I was asked about private bus companies and Transport for London. Private utilities that run transport services, such as private bus companies, are regulated as they operate services where they have special or exclusive rights to do so. That limits competition and is reflected in international trade agreements; for example, the World Trade Organization government procurement agreement specifically lists Transport for London as being covered by that agreement. The Bill exempts it under paragraph 17 of Schedule 2 as it will be regulated by Department for Transport regulations.

The noble Lord, Lord Berkeley, asked about the reasons for excluding certain utilities. I will turn to his amendments now. Schedule 4(8) includes certain utility sectors that are exempt from the regulations. As they have proved to the European Commission, they are exposed to competitive forces. Schedule 4(8) provides an exemption determination for those decisions. If other sectors can do similarly, we will be able to exempt them from procurement regulations.

Regarding the amendments tabled by the noble Lord, Lord Berkeley, Schedule 4 sets out the scope of utilities activities, largely mirroring the coverage of the existing regime domestically. I repeat: this reflects our commitments in trade agreements such as the WTO’s GPA. Amendment 25 would extend the exclusion for the supply of gas and heat produced as a consequence of carrying out a non-utility activity to all contracting authorities where this is currently available only to private utilities and public undertakings. This would breach our commitments in the WTO government procurement agreement and other international agreements where this exemption applies only to private utilities and public undertakings. It does not apply to contracting authorities that are public authorities.

Amendments 26 and 27 seek to remove from the scope of the Bill utility contracts related to public transport services and contracts associated with activities for the provision of airports and ports, as was discussed by the noble Lord, Lord Berkeley, and my noble friend Lord Moylan. Both activities are covered under the existing regime, and are required by our international commitments under the WTO GPA and other international agreements that require access to utility contracts in the transport, ports and airports sectors. The Bill therefore regulates these utility activities to comply with our international obligations.

As my noble friend Lady Neville-Rolfe said, the Bill provides for a mechanism in Schedule 4(7); this was alluded to in a different context by the noble Lord, Lord Fox. This will be developed to permit an appropriate authority to exempt utilities operating in these sectors where they are exposed to competition. This would apply to all utilities and is permissible under our international obligations.

I will reflect carefully on—

[Lord Scriven (LD)]

Can the Minister clarify what an appropriate authority is? Who are the appropriate authorities and what is the process for that appropriate authority to amend the private utilities provision?

[Lord True (Con)]

I was asked that at Second Reading. An appropriate authority is a Minister of the Crown or a Welsh Minister. Indeed, the noble Lord’s colleague, the noble Baroness, Lady Humphreys, referred to this when we discussed the earlier group of amendments. We clarified it in some of the amendments that we tabled but were not brought forward earlier. Among them was an amendment to replace “appropriate authority”, although I cannot remember with what exact words—a Minister of the Crown or a Welsh Minister, I think.

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which essentially has no scrutiny at all. It has the Secretary of State, who may or may not choose to scrutinise it. Within those powers, ARIA can buy property for example. It can buy things—anything it likes, effectively—with essentially no public scrutiny. We are dealing with a Procurement Bill, and to deliberately put in place an organisation that can spend hundreds of millions of pounds—if, as I say, it ever manages to find a top team and get itself in order—with no scrutiny whatever is remiss. It would be remiss of your Lordships on this Committee not to consider this and it would be remiss of the Minister not to respond directly as to why there should not be some form of scrutiny. It could be the same sort of scrutiny that the Security Service enjoys or something different, but simply relying on the Secretary of State, as currently, is not good enough.

[Lord Scriven (LD)]

My Lords, I shall speak on this set of amendments, particularly Amendment 42. It is the first time that I have been able to speak on the Bill. I was not able to participate in Second Reading, but I have followed the debate and, like many noble Lords, spent the weekend probably losing a little hair trying to make sense of the number of amendments that have come out. I thank the Minister for the withdrawal of Amendment 1 and for looking to find a way forward with some of the issues that those amendments made.

Particularly with Amendment 42, I raise my interests in the register, particularly as a vice-president of the Local Government Association and as an adviser to the Robertson group of organisations, which does work with the public sector. Amendment 42 is genuinely probing. It addresses what is in, what is out and what is the autonomy and the role of local authorities within the Bill. In particular, when a local authority works with others, how do some of the provisions within the Bill work—whether it is a central purchasing authority or not—particularly when they overlap with other procurement legislation in, for example, the Health and Care Act?

I shall put a couple of scenarios to the Minister and genuinely look forward to hearing some of his replies. First, local authorities are being asked to significantly integrate social care and health. They will be part of integrated care boards, which are purchasing organisations. Some public sector money from local authorities will come forward as part of that. When they are purchasing as an integrated care board and significant amounts of local authority money is put in there, which provisions will the local authority be asked to enact? Will it be the provisions within this Bill or the provisions under Sections 79 and 81 of the recently enacted Health and Care Act? There will be potential conflicts of interest as to by which procurement rules two different partners procuring a public good will be bound. I hope the Minister can help to explain that scenario.

There are also lots of local authorities that have significant public-private partnerships. Again, what rules will the public-private partnership be bound by, particularly when the local authority purchases significant services or goods with a private sector organisation which are to be used for public procurement? How will the private sector organisation be bound by that? For example, what rules will there be for that public-private partnership when purchasing a good, depending on whether the 51% amount has been put forward by the public sector—the local authority—or by the private sector entity?

I understand from reading the Bill that there will be the national procurement policy statement. I just need to understand from the Minister what autonomy local authorities will have to move away from the procurement guidelines that will be in the NPPS.

Finally, it would be helpful if local authorities could be put in the Bill as centralised procurement authorities. Is there any particular reason why the Government did not take that on board in the Bill?

There are many general questions about local authorities; those are a number that I wish to probe. I genuinely look forward to the Minister’s answers.

[Baroness Neville-Rolfe (Con)]

My Lords, I very much welcome the question of the noble Lord, Lord Scriven, about local authorities. They are so often underappreciated and undervalued, and we need to know what can and cannot be done in a collective way—the question he is rightly probing. For example, a simple question would be: for planning services—where my committee has identified a huge shortage of talent and resources in some planning authorities—could you have a collective procurement, and would that be caught by this Bill?

I also ask what the GPA does on telecoms and the internet infrastructure. I must say that I tried in vain, as a Minister, to get contracts for the roll-out of infrastructure around Washington DC—there was not a level playing field. I fear that overseas interests will benefit preferentially from this Bill, as they have done in some other areas, such as contracts for difference in energy. Can the Bill help to hold the GPA to level the playing field?

I strongly support my noble friend Lady Noakes, both on her brilliant technical points, which I barely understand, and on ARIA. On the latter, I agree with her that it must be free from hassle—I think we agreed that in our debates in this House. It probably does not have enough money, but it is important to ensure that it can proceed without the benefit of lots of new regulations, which could be quite bureaucratic to them.

Procurement Bill [HL]

Lord Scriven Excerpts

Committee stage
Monday 11th July 2022 Grand Committee

We have discovered in this Committee that there is an effective international framework through the GPA, so I encourage the Minister to go away and consider whether we can slim down the Bill, which I think is the logic of my noble friend Lord Moylan’s creative amendment. In any event, perhaps I can say that I would find it useful if we could see what is old, what comes from EU law, what is new and why. I am open to persuasion that all is well, but I have my concerns, which I have articulated today.

[Lord Scriven (LD)]

My Lords, I have listened with great interest to this debate and seen the tension between those who want what they call a flexible and open framework and those who want a more principles-based framework with an understanding of what public procurement is about. We have to be clear that the public procurement is not just about the monetary bottom line; it is about ensuring that social good comes from every pound that the public sector spends. It is not just about ensuring that value for money is the bottom line—the pounds and pence; it is about the environment, the local economy and trying to ensure that people have opportunity, and ladders of opportunity are sown in communities so that people can grow.

I have worked as a public sector employee, I have worked in the private sector on procurement, I procured in the public sector as a health service manager and, like others here, I have been a politician who set the framework for public procurement, particularly when I was the leader of Sheffield City Council. I think that, sometimes when we speak, we are divorced from reality. Most suppliers use a legal challenge not on the process but on the criteria and how those criteria have been judged for the award of a particular contract. I cannot think of any time in my life when I have been involved in procurement that a legal challenge has been brought against an organisation that I either worked for or have been a senior politician in where the criteria have not been the particular legal point on which a supplier challenges; it is not normally the process.

Interestingly, the noble Lord, Lord Moylan, gave many examples of why suppliers might not be able to do anything. Nothing in the Bill would stop that; in fact, the noble Lord, Lord Lansley, has an amendment in a future group that talks about having a more of an outcome approach to procurement, which would allow innovation. It would allow that innovation to be seen as something that it brought into the tendering process right at the beginning by going out to talk to suppliers about what outcomes were required, as the noble Lord suggests. So we have to be careful about how we frame this discussion and about saying that being less clear about principles and what is required will somehow stop legal challenge.

I would argue the other way: if there is no definition in the Bill of such things as value for money, that is a charter for lawyers to start saying, when a contract has been awarded, “What did you mean by value for money?” If over 400 different procurement authorities have a different view of value for money, and I am a supplier looking for a contract in 100 of them and everybody is giving a different definition, then legally there may be more challenges to come. There have to be clear definitions in the Bill of certain aspects, such as what we mean by value for money—or, interestingly, social value. Again, if there is no national definition of that, it is a lawyers’ charter.

The tension between what is in the Bill and having more flexibility has to be thought through. It comes down to what a number of noble Lords have said, namely that this Bill is very confused. It is complex and contradictory. It has not been thought through, particularly the elements which need to be clearly defined so that it does not become a lawyers’ charter. I ask the Minister, in replying, to say what we actually mean by social value. Once this Bill has passed, if I was a supplier, how would I know what value for money was? Will value for money be defined for every contracting authority and understood by every supplier? Or will it be open to local interpretation to determine what social value is? The Bill is contradictory and has some holes, but we should be very careful of saying that being more flexible stops lawyers challenging. Sometimes not having things in the Bill means that lawyers will challenge more.

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

My Lords, I thank all those who have spoken. Lest anybody be alarmed by the coughing I have inflicted on the Committee and my not very brilliant voice, I should say that I tested several times over the weekend and this morning for Covid and the results have been negative.

It has been a very interesting debate. I have listened to it very carefully, including the many contradictions within it, which were summed up ably by the noble Lord, Lord Scriven. There are differences of opinion. Indeed, one challenge was laid down at the beginning by my noble friend Lord Moylan and spoken to eloquently at the end by my noble friend Lady Neville-Rolfe. Of course, we know the other extreme is the intervention from the noble Lord, Lord Coaker, who wished to use the Bill for very extensive potential government intervention.

All of us in this House and in public service care passionately about the principles in which we believe. Those principles differ and that is the nature of the change that can be made when Governments change. The question this Committee is wrestling with, and will I am sure continue to wrestle with through to Report, is the extent to which one encrusts the Bill with the total sum of all the hopes of those contributing to Committee, with some of the attendant risks that have been referred to in relation to litigation; or, at the other extreme, the extent to which one strips it down and concentrates on simplicity. There is an inherent tension, which is expressing itself in a very interesting and informative debate. I can assure noble Lords that, as we go forward, the Government will be listening carefully to both sides of it.

It started with Amendment 37 to Clause 10 and Amendment 460 to Clause 89, tabled by my noble friends Lady Neville-Rolfe and Lord Moylan. These seek to limit the scope of remedies for breach of statutory duty under Part 9 to compliance with only the procurement objectives in Clause 11.

A supplier’s ability to properly hold a contracting authority to account is essential for a well-functioning and fair procurement system and helps to ensure that contracting authorities comply with specific requirements under the Bill. Our submission, in presenting this legislation, is that, without such obligations to comply with the detailed provisions of the Bill, many of the important things that it seeks to deliver would fall away. For example, some of the transparency obligations in the Bill are intended to ensure early publication of information in order to support small businesses. If these cannot be enforced, we risk losing that important support mechanism.

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[Lord Scriven (LD)]

Would the Minister give way? That is one definition of local growth: that it has to be a local company that gets the business. Local growth is completely different: it could be subcontracting or the value sustainability that it puts into the economy, which gets to the nub of the problem. Without having clear definitions, we get these kinds of differences. Would the noble Lord agree that his definition of local growth is predicated on who gets the supplier contract but, actually, local growth could be much broader?

[Lord True (Con)]

My Lords, I will look carefully at what I have said and what the noble Lord has said. I think I said—and will repeat if I have not said it already—that it is important to have some flexibility, particularly at the lower end of contract letting, precisely to give local authorities and others the freedom of judgment for which the noble Lord asks. The more one codifies these aspects in statute, and tightens the definition, the greater the risk—this is something we have wrestled with in Committee—that one limits the flexibility that the noble Lord seeks for local action.

A formal regulatory evaluation of whether each public contract delivered “social value” and “local economic growth” could also be an unnecessary burden on contracting authorities. I repeat my view that local contract management should be able to judge the effectiveness of all aspects of the contract. The Bill makes provision for the publication of information on the performance of large contracts—currently, those valued at over £2 million—which we consider a reasonable and balanced approach.

The Government do not support the use of a debarment list for any purpose other than to designate suppliers that meet a ground for exclusion and have failed to address their risk. Debarment is a last resort to be used when a supplier poses a significant risk to contracting authorities or the public, following criminal or other serious misconduct. We do not consider it appropriate that failure to meet characteristics such as social value should form the basis of such a punitive sanction.

Amendment 46, tabled by the noble Lord, Lord Clement-Jones, who spoke with, as always, great passion and authority on these subjects, seeks to insert an additional principle on automated decision-making and responsible and ethical use of data when carrying out a procurement. The new data platform will deliver enhanced centralised data on UK public contracts and spending. All data that is published will be freely accessible through the central digital platform. This is in support of the objective set out in Clause 11(1)(c), which expects contracting authorities to have regard to the importance of

“sharing information for the purpose of allowing suppliers and others to understand the authority’s procurement policies and decisions”.

The data displayed in the platform pertains to the public sector’s commercial activity, including tender opportunities, contract awards, spending and so on. The UK’s historic commitments to data protection standards and public trust in personal data use will continue to be at the heart of the regime. The proposals build on the fundamental principles of the UK GDPR, and these will continue to underpin the trustworthy use of data to support our central digital platform.

The noble Lord asked why one would be reluctant to legislate for the ethical use of data and automated decision-making. We are not legislating for specific rules for certain sectors but instead setting the legislative framework for public sector procurement. In the same way that we are not legislating for the standards for construction projects, we are also not legislating for the standards for data projects. The Government already issue extensive guidance––the noble Lord referred to some of it—on best practice where appropriate, and contracting authorities should have that in mind when purchasing AI or data products and services.

The Government are resisting this amendment, as policies are still evolving at government level on ethical use of automated decision-making and data. This is a fast-changing world—as the noble Lord knows better than most—so legislating in the Bill could be a premature fix, as it were. I have already referred to the existing guidelines on responsible use of AI procurement for public sector organisations on how to use data appropriately. These evolving policies should be applied by contracting authorities as appropriate. That said, we are open to more engagement on this topic, and I have listened again very carefully to the points that the noble Lord makes. I can give an undertaking to him, as I did earlier to others, that we will engage with him between now and Report, because he is right that this is an important area. We are just cautious about seeking to fix specific things in legislation at the moment.

My noble friend Lady McIntosh of Pickering is, regrettably, unable to be here, for reasons referred to earlier in this Committee debate—and I confess I had nothing to do with that. Her amendments are around the subject of acting with integrity and being seen to act with integrity, which my noble friend Lady Neville-Rolfe also referred to. The integrity objective will oblige contracting authorities to consider how best to prevent fraud and corruption through good management, prevention of misconduct, and control. As well as oversight and control, open competition and the strengthened transparency requirements in the Bill will enhance integrity in public procurement.

It is essential that the procurement regime in the UK commands the trust of suppliers, the public and our international trading partners. While it is important that contracting authorities actually act with integrity—and that is a fundamental point—the objective is drafted as it is due to the importance that those observing procurements can see that contracting authorities are acting with integrity. We will, however, reflect on my absent noble friend’s amendment and the points made in debate, including the direct question that my noble friend Lady Neville-Rolfe asked me, to which I do not have an answer as I stand here, about precedents in legislation—clearly, her question will be in Hansard and requires an answer.

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[Baroness Bennett of Manor Castle (GP)]

My Lords, I rise not solely to demonstrate that there is broad ideological support for small and medium-sized enterprises being given a larger share of the kind of procurement that we are talking about; I do so also because I have attached my name to Amendment 75B in the name of the noble Baronesses, Lady Thornton and Lady Hayman.

I am going to attempt not to repeat everything that has been said but I want to pick up something said by the noble Lord, Lord Wigley. No one else has drawn attention to the fact that the previous group and this one are related. They have aspects acknowledging that SMEs bring different qualities—particularly quality. The noble Lord suggested that, if we do not put in specific provisions about SMEs, it is inevitable that the big companies will dominate. I say that if we do not put in provisions about social value and quality of services—as the noble Baroness, Lady Thornton, said, that is delivered under the Public Services (Social Value) Act—and do not account for those things, it will possibly be even more telling against SMEs than the rules and the points addressed by the amendments.

I am not particularly picking on the noble Lord, Lord Aberdare, here as I was going to say this before he spoke, but I have seen from all sides of the Committee a huge focus on productivity improvement and innovation, but we need to be careful about that terminology. Again, this point comes back to the previous group: a lot of what we are talking about here is the provision of care and the caring services, the type of provision that really does not lend itself to the same kind of measurement as how productively you are producing widgets. If a nurse is caring for a dying person, maybe it would be more “productive” if they were caring for two dying people at the same time instead. We really have to ask ourselves about that. I can see some head-shaking happening but a lot of our measures of productivity have been that gross and raw, and have failed to acknowledge issues of quality and service.

We need to acknowledge that there are many elements of our service economy where those measurements would be inappropriate. If you are providing a rape crisis service to people in rape crisis, how do you make that more efficient? What does that actually mean? What does innovation mean in that context? I think we sometimes fall into a narrow, widget-based, economistic way of looking at these issues, and we need to look at them much more broadly.

I am going to finish with something on which I think the noble Baronesses opposite will agree, picking up on the point by the noble Baroness, Lady Neville-Rolfe, about 30-day payment terms. Speaking as someone who many years ago used to work for a small independent business that supplied supermarkets on 120 days, which usually meant 150-day payment terms, I think that is crucial. I say to the Minister, if he is responding to this group, that perhaps this is an issue that we could look at in future in the form of a letter. It is crucial for SMEs that it is acknowledged when 30 days or less being part of the procurement process needs to be written into the contract to enable them to bid. That could be an important factor.

[Lord Scriven (LD)]

My Lords, this has been a fascinating as well as nearly unanimous debate about the importance of small to medium-sized enterprises and the role they can play in innovating, stimulating, changing and helping local economies grow. Part of that will be—I have to say to the noble Baroness, Lady Bennett—through productivity. Productivity and quality in themselves are not too separate things; they can go hand in hand in caring services. I speak as a former health service manager. Productivity is not just about how you apply people; it is how you apply all the resources to get better outcomes for those you serve. Therefore, sometimes there are contradictions and it is hard, but they are not always separate.

I would like to speak to a number of amendments in this suite. I thank the noble Baroness, Lady Neville-Rolfe, for doing this in a previous life because—I am sure she will understand what I am about to say—every little does help, particularly with small to medium-sized enterprises. A number of the noble Baroness’s amendments are probing for one reason, I think. I am sure that the Minister will come up with specifics in the Bill which will help small to medium-sized enterprises, but I think the general view is that it does not do it. It does not go in depth and give the clarity which I and other noble Lords have said will help to give a level playing field for small to medium-sized enterprises, which is what is required.

In particular, an important amendment spoken to by the noble Baroness, Lady Noakes, on behalf of the noble Lord, Lord Lansley, was on capacity building. In my life of working in local economies, I have seen that the big thing that helps is capacity building for small to medium-sized enterprises. If anything should be on the face of the Bill, capacity building for small to medium-sized enterprises and not-for-profits should be, because they can—with help from the public sector in terms of capacity building—achieve quite a lot.

I have seen that in a number of areas including my own area of Sheffield when I was leader. We had something called “Buy for Sheffield”. It was not an issue of giving special treatment to small to medium-sized enterprises; it actually got ahead and gave a lot of capacity building. Through that capacity building and then through their own innovation, they could go to larger organisations and get part of the supply chain on their own volition rather than what normally happens, which is that the large organisations look for small to medium-sized enterprises down the supply chain because it gets them ticks. It actually meant that innovation came. There is something particularly in Amendment 86.

I am not quite sure why the noble Baroness, Lady Neville-Rolfe, chose £5 million because the average turnover of a small to medium-sized enterprise at present is about £756,000. I think because it is a probing amendment there has to be a cut-off point which says that for companies below a certain turnover there should be a special emphasis within this Bill. I hope that the Minister goes away and reflects on what has been said because it does not seem deep enough, and I am sure we will be coming back to this on Report as an important part of the Bill.

I agree with the noble Baroness, Lady Noakes. We have been diametrically opposed on many Bills, but on Amendments 290 and 295 there are elements I would want to see apply to small and medium-sized enterprises. I understand why the noble Baroness, Lady Neville-Rolfe, has done that, but there are some really important issues about the probity and capacity of small to medium-sized enterprises as to whether they get the procurement.

Finally, I want to re-emphasise what my noble friend Lady Brinton said. There is a huge contradiction between having a Bill for public procurement and then saying that, by statutory instrument, the Minister can take away that right for the health and social care provision. I was explaining this over dinner on Saturday to a number of friends who were asking me what I was working on in Parliament at the moment. When you explain the Procurement Bill, people glaze over, but when you explain that there is a provision for £70 billion-worth of their taxes to be excluded at the signing of the Minister’s pen, suddenly they become very excited—the glaze stops.

The Minister tried to explain this to my noble friend Lady Brinton; I was more confused after the explanation than before it. She needs to try harder to explain where the contradictions are and how they will be dealt with as a unified Procurement Bill. On the whole, like most noble Lords, I agree with the thrust of these amendments, but Ministers need to go away between now and Report and think carefully. It is clearly not strong enough to give a level playing field to small to medium-sized enterprises.

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[Baroness Scott of Bybrook (Con)]

My Lords, I thank your Lordships for a really interesting debate. A lot of what has been said about support for small and medium-sized enterprises, social enterprises and voluntary organisations is something that the Government also support and, through the Bill, have been trying to support even more. After we finish Committee, we need to meet interested noble Lords and talk more about these issues because they are important to the Committee, as I can tell, but also to the Government. I make no promises, but we should be using all the knowledge in the Committee as we discuss it further.

In that context, I will answer a few questions. I say to the noble Baroness, Lady Brinton, that I am sorry if I did not quite get to the interface with the Health and Care Bill. I will try to get a bit further but I am afraid I do not think I can go as far as she wants. All public authorities will be covered by the Procurement Bill in relation to health except those that will come under the regulations made under Clause 108. There should therefore be no gap in procurement regulations between the two. On health issues, regarding entities under health procurement, further work is going on at the moment in both departments, and we will come back to the noble Baroness as things move forward.

I turn to the amendments in this group. I note that other non-government amendments have been tabled, some of which address prompt payment and relate to SMEs but are also about social values, which have been quite a big part of this debate. Those will be covered at a later stage so I will not cover them; my noble friend the Minister will do so, some of them probably in the next group.

Amendment 38 would impact Clause 10, Amendments 97 and 100 would impact Clause 18 and Amendments 290 and 295 would impact Clause 54. Each of these amendments has been proposed by my noble friend Lady Neville-Rolfe, and I thank her for them. They would enable contracting authorities to exempt businesses, based on their size and turnover, from certain obligations set out in the Bill. Public sector procurers are required to determine the most advantageous offer through fair and open competition, and the Bill sets out that the buyer should contract with the bidder offering the most advantageous tender. We want to focus on getting the best value for the taxpayer by opening competition to all businesses of all sizes.

That is not to say that we are not keen to open public procurement, as I have said, to more SMEs; in fact, quite the opposite. First, we are committed to ensuring that the new procurement regime is simpler, quicker and cheaper for suppliers, which particularly benefits SMEs and social enterprises, ensuring lower barriers for entry to the market. Secondly, bidders will have to submit their core credentials only once to a single platform, making it easier, especially for SMEs, to bid for any public contract. The single transparency platform means that suppliers will be able to seek all opportunities, including a pipeline of future opportunities, in one place.

Thirdly, the Bill will ensure that prompt payment flows down the supply chain, making it more attractive for SMEs to get involved. Fourthly, contracts below the threshold listed in Schedule 1 can be reserved for suppliers based in the UK and/or small suppliers where it is good value for money to do so. Thus, the Bill represents good news for SMEs.

While we share the noble Baroness’s keenness to support SMEs in getting access to public procurements, we cannot do that by simply exempting them from procurement rules altogether, as her amendment to Clause 10 would do.

Amendment 50, also proposed by my noble friend Lady Neville-Rolfe, would require the procurement objectives in Clause 11 to make explicit the obligation on contracting authorities to have regard to the importance of keeping the burden on SMEs associated with tendering as low as possible. While we support this goal, there are risks in legislating in such stark terms. Contracting authorities must keep an open and fair playing field for all bidders. While we take steps which facilitate access, in particular for SMEs, it would not be wise to encourage the procurement community to believe that some form of active discrimination in favour of SMEs was appropriate.

That said, we have taken significant actions to level the playing field for SMEs without actively discriminating. Some of these I have mentioned, but I add that we have reformed commercial tools, such as frameworks. This will allow longer-term open frameworks, which will be reopened for new suppliers to join at set points, so SMEs are not locked out, and the new concept of dynamic markets—

[Lord Scriven (LD)]

Does the Minister accept the feeling around the Committee that, while we accept that things are moving forward, they are not strong enough? On the framework issue, one of the provisions in the Bill is that a fee has to be paid every time is contract is let. That does not help. Once you get into the detail, there are barriers to the progression of SMEs. What we are not asking for is a system which supports only SMEs; we are asking for a more risk-based assessment, based on what the risk is of the procurement amount, to release some of the normal procedures and bureaucracy that is required to give them a view. One of the issues that the Minister can perhaps look at between now and Report is a more risk-based approach to public sector procurement rather than a one-size-fits-all which, on the whole, the Bill still is.

[Baroness Scott of Bybrook (Con)]

I agree with a lot of that and I think it is something that we will discuss further. I thank the noble Lord for his ideas.

This will allow a longer-term open framework which will be reopened for new suppliers to join at set points, so SMEs are not locked out, and the new concept of dynamic markets which, like the current dynamic purchasing system, will remain always open to new suppliers. All these will provide greater opportunity for SMEs to join and win work.

Amendment 75B, tabled by the noble Baroness, Lady Thornton, would insert a clause into the Bill on market stewardship, meaning contracting authorities must consider the impact of procurement on small and medium-sized businesses, social enterprises and voluntary organisations. They would also need to consider how to improve the diversity of their supply chains including, but not limited to, these organisations.

I have previously touched on how the Bill benefits SMEs and would also like to highlight Clauses 32 and 33 to your Lordships, which enable contracting authorities to reserve certain contracts to supported employment providers and public service mutuals. We indeed recognise the importance of diverse supply chains and the benefits to the delivery of public services, and that is why in Clause 63 we require that 30-day payment terms will apply throughout the public sector supply chain, regardless of whether they are written into the contract, ensuring SMEs and other organisations receive prompt payments and the increased liquidity they bring.

Amendment 86, tabled by my noble friend Lord Lansley, would make explicit obligations on contracting authorities to consider small and medium-sized enterprises in preliminary market engagement. Contracting authorities are able, under the new legislation, to design their preliminary market engagement in a way which gives consideration to SMEs, but too many obligations on contracting authorities will discourage them conducting this engagement. I therefore suggest this amendment is not needed.

My noble friend Lady Neville-Rolfe’s Amendment 534 proposes a new clause that seeks to make legislation obliging a Minister of the Crown to carry out regular reviews to consider the Act’s performance in relation to the award of contracts to SMEs. I draw to noble Lords’ attention that the Government do capture SME spend data for those SMEs contracting either directly or in government supply chains.

Procurement Bill [HL]

Lord Scriven Excerpts

Committee stage
Wednesday 13th July 2022 Grand Committee

Some of the details of how that is done—or part of how it is done, as some of the stuff is in statute and we will talk about things such as preventing modern slavery and so on—will come within the national procurement strategy, which we will discuss on a later group. That would be my response to the noble Baroness. I sense that I have not persuaded the whole Committee on this but, for all the reasons I have given, there is a danger in trying to place too much of this in primary legislation, which is why I urge that the amendment be withdrawn.

[Lord Scriven (LD)]

I have listened very carefully and have just reread every amendment in this group. Can the Minister point to one amendment that prescribes how the principles in each amendment have to be enacted by each local authority or each purchasing authority? They are broad principles which allow the flexibility that the Minister has just described or relate to issues such as social value, which is already in Clause 11. The amendments are exactly the same regarding social value, the environment and social aspects. Where does the Bill say what that means and where does it not allow discretion?

[Lord True (Con)]

A considerable number of amendments mandate that contracting authorities must have regard to certain items. Others add to the objectives in Clause 11. It is a difference of interpretation. The Government are in one place. On reflection, I think that perhaps people outside government circles will think that that is not as unwise as it now seems. I again respectfully suggest that the amendment be withdrawn.

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The Government often talk about being world leading. These targets, which, as the noble Baroness, Lady Boycott, set out, have been established through very careful consideration and development of the national food strategy, are still extraordinarily modest by international standards. I know of many cities where targets for food in schools, hospitals and prisons are very close to 100%, with very demonstrable positive effects. I agree with the noble Baroness, Lady Boycott—and the comments in the Committee have supported this—that this is an uncontroversial amendment which the Government can surely accept.

[Lord Scriven (LD)]

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

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

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

[Lord Hunt of Kings Heath (Lab)]

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

[Lord Scriven (LD)]

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

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

[Baroness Boycott (CB)]

I just wanted to add something to my amendment; I thank Members of the Committee for their support. I have very little time for Brexit, as probably everybody knows, but when the French attempted to do this, they were stopped under EU rules as it was to do with restrictive trading. Now that we are out of the EU, we have a chance to produce a fantastic procurement Bill that favours small and medium-sized enterprises, local procurement, local health and local sustainability. If we do not take that chance, frankly we will have missed one of the great opportunities that Brexit gave us.

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[Lord Scriven (LD)]

My Lords, I have added my name to Amendment 528C, which my noble friend Lady Brinton has already spoken to. Like her, I am a little perplexed about the Government’s view, according to the Minister, that public sector procurement should be based on value for money and that there should be a co-ordinated approach to public sector procurement so that businesses understand the rules in which they are working but also have flexibility, yet the health service seems to be excluded from that.

For the convenience and understanding of the Committee, we need to look particularly at Section 79 of the Health and Care Act 2022, which says:

“Regulations may make provision in relation to the processes to be followed and objectives to be pursued by relevant authorities in the procurement of”


services. Relevant authorities in this legislation are: NHS England; NHS England foundation trusts; an NHS trust established under Section 25; interestingly, a combined authority, which is a combination of local authorities; and a local authority in England. A relevant authority is not just an NHS body; it is a relevant authority if it is purchasing or procuring

“(a) health care services for the purposes of the health service in England, and (b) other goods or services that are procured together with those health care services.”

Ministers have said previously from the Dispatch Box that all that the provision applies to is the provision of healthcare services in England. They have not spelt out that it also applies to other goods or services that are procured together with those for healthcare services. If, for example, a care village was being procured where there was predominantly a capital spend on housing and where services for healthcare were to be procured at the same time, which set of procurement rules would apply? Would it be the rules within this Bill, those within the Health and Care Act, or a combination of both?

It is important that Section 79 of the Health and Care Act says that

“Regulations under subsection (1) must, in relation to the procurement of all health care services to which they apply, make provision”


for the following:

“(a) ensuring transparency; (b) ensuring fairness; (c) ensuring that compliance can be verified; (d) managing conflicts of interest.”

There is nothing about value for money, yet the Minister has said repeatedly at the Dispatch Box in this Committee that the Government’s view is that public procurement should be based on value for money. If that is the view of the Government—not of the Cabinet Office, but of the Government—why is value for money not in the Health and Care Act as a factor for public procurement of healthcare provision in England and other goods or services that are procured together?

There is a gaping hole which is not clear. It is so deep that I do not think the Minister can explain the contradiction between this Bill and the Health and Care Act in terms of procurement provision. So, particularly on joint procurement in something like a care village, which provision would apply? If the Minister cannot answer that very clearly from the Dispatch Box, I feel that this is going to come back on Report. Clearly, there is confusion not just in terms of legislation but for those businesses which wish to be part of a contract for a joint provision between health and other services.

My final question is this: why is it that combined authorities in a local authority in England are in the Health and Care Act but it says here that local authorities will be driven by the provisions in this Bill? Which one would a local authority have to adhere to in terms of the confusion that is around it?

[Lord Davies of Brixton (Lab)]

My Lords, I want to make a point about proportionality. It arises under the amendment in the name of the noble Lord, Lord Aberdare, and runs through much of the Bill. In a sense, I am asking a general question but hanging it on the hook of Amendment 120. It is a point of some concern to small organisations; we are talking here about small charities and local voluntary organisations. In much of the debate, people have referred to businesses and enterprises, but this will also apply to local voluntary organisations and charities, which clearly do not have the resources or staffing to deal with the scale in the way that an organisation such as Oxfam, for example, could. They have their local job to do; to a certain extent, spending a lot of time drawing up a bid to provide a service will be a diversion from their work. Proportionality must have a role in assessing a contract. I am intrigued and ask the Minister to give some indication of an overall perspective on proportionality as it affects local organisations, charities and voluntary organisations.

Procurement Bill [HL]

Lord Scriven Excerpts

Committee stage
Monday 18th July 2022 Grand Committee

[Baroness Noakes (Con)]

My Lords, I shall speak also to Amendment 107 in this group. The large part of this group is government amendments, but my two small probing amendments have found their way into my noble friend’s rather large group.

Amendment 96 is another “may/must” amendment, which we always enjoy in this Committee. It probes the effect of not satisfying participation conditions on a tender. Clause 21 allows a contracting authority to set conditions of participation in specific areas. Subsection (6) permits but does not require the contracting authority to exclude a supplier which does not satisfy a participation condition from then participating in all or part of the tendering process.

If a contracting authority does not exclude a supplier from the tender process, one might think that such a tender could result in the award of a contract. If that were not the case, I can see no reasonable case for allowing such a tender into the process at all. However, subsection (3)(a) of Clause 18, which deals with contract award, states that

“a contracting authority … must disregard any tender from a supplier that does not satisfy the conditions of participation”.

Hence, we seem to have an Alice in Wonderland world where a supplier which has fallen foul of participation provisions can take part in the tender process, but only on the strict understanding that it cannot win the contract. That does not make any sense to me. My amendment would make the terms of Clause 18 permissive, so that a contract could be awarded. Another solution would be to make exclusion mandatory from the tender as well as from the contract award.

My second amendment in this group, Amendment 107, is a simple probing amendment to ascertain what is meant by Clause 19(3), which deals with competitive tendering procedures. Subsection (3) requires the procedure to be proportionate,

“having regard to the nature, complexity and cost of the contract”,

which seems at first sight entirely sensible and should stop contracting authorities using unnecessarily burdensome procedures. What subsection (3) does not say, however, is how this is to be assessed.

In a rare case of going beyond what is in the Bill, the Explanatory Notes say:

“Subsection (3) requires contracting authorities to ensure that the procedure is not designed in a manner that is unnecessarily complex or burdensome for suppliers”.


This is, in fact, from paragraph 141 of the Explanatory Notes, not paragraph 142 as I set out in my explanatory statement. The Explanatory Notes therefore firmly place the consideration of proportionality in the context of suppliers, but that has not found its way into the text of Clause 19, and that is what my Amendment 107 seeks to change.

In addition, even if subsection (3) could be read as being a supplier-centred proportionality requirement, it does not give any help as to whether the contracting authority has to consider suppliers generally, in an objective way, or whether they should take account of the particular characteristics of likely suppliers. I have in mind in particular that what proportionality might look like to a multi-million-pound contracting business is light years away from its impact on a small or medium-sized enterprise.

I hope my noble friend will agree to make the Bill clearer in this regard, or at least make a clear statement from the Dispatch Box as to how Clause 19(3) is intended to be interpreted. I beg to move.

[Lord Scriven (LD)]

My Lords, I rise to speak to Amendment 105 in the names of my noble friends Lord Wallace of Saltaire and Lord Fox. I will come on to some of the points the noble Baroness, Lady Noakes, made, but before I start, I apologise for not being here at the start of the Committee. As my noble friend Lord Clement-Jones said, I was on a train for four hours. Actually, you can hear my croakiness: I am the healthiest one on our Front Bench today, so I am here—

[Baroness Smith of Newnham (LD)]

That is not quite true.

[Lord Scriven (LD)]

Well, the healthiest on the Procurement Bill and constitutional affairs Front-Bench team. I thank the Minister, I think, for passing on his cold of last week to me.

My noble friends’ Amendment 105 is also a probing amendment. Clause 19 uses the word “appropriate”, and this amendment is to see

“under what circumstances it may be considered ‘appropriate’ not to undergo an open tendering procedure.”

There are no criteria or guidelines about what may be appropriate. This is just a probing amendment to see if the Minister can explain why such a wide-ranging word as “appropriate” is in the clause. Who will decide whether it is appropriate, and what guidelines or criteria would the Government expect the authority to seek in determining whether the open tendering procedure should not go ahead?

With Amendment 96, yet again, the noble Baroness, Lady Noakes, raises some important points in Committee by changing just one word. I particularly point to what she described as the “Alice in Wonderland world”, in which you can be debarred from one part of tendering but not have been given a contract—or the other way round. The noble Baroness’s suggestion to include exclusion from the tendering process in the Bill makes eminent sense or we will be in the position in which people could, by law, tender but would be debarred from getting the contract, even if theirs was potentially the best tender around.

With those comments, I feel that, particularly on Amendment 105 in the name of my noble friends, some clear guidance from the Dispatch Box would be welcome.

[Baroness Hayman of Ullock (Lab)]

My Lords, I thank the noble Baroness, Lady Noakes, for introducing her two amendments. As ever during Committee on this Bill, she has spotted where the nonsense lies and where problems could quite easily be resolved, if her wise words are listened and adhered to.

On her Amendment 96, I know my dear and noble friend Lord Coaker is very disappointed not to be having the must/may discussion with her today and that it has fallen to me, but it is an important point. Different terminology in different parts of the Bill impacts on what is expected. What does that mean? As the noble Baroness clearly demonstrated, if you follow that logically—all the way down the rabbit hole, to carry on the metaphor—it does not make sense any more. I think she has picked up something that could be sorted out straightforwardly and I would be interested to see whether the Minister agrees.

The noble Baroness’s second amendment, Amendment 107, on the lack of assessment and what is in the Explanatory Notes not being sufficient for what we need to know to feel secure about this clause, is again a simple amendment that makes a lot of sense. To me, it strengthens and provides clarity to the Bill. The noble Baroness made the critical point that these kinds of things have a different impact on multinationals from small businesses and, as we have said previously, charities and voluntary organisations. This is important.

The noble Lord, Lord Scriven, ably introduced the amendments in the name of the noble Lord, Lord Wallace. I hope the Liberal Democrat Front Bench manages to recover before we come back in September, but I thank the noble Lord for that. They are about terminology —what the words mean and what the impact of that terminology is on the Bill. As the noble Lord pointed out, there are no guidelines and criteria, and nothing specified about what “appropriate” means, nor on whose shoulders it falls to interpret what it means and whether that could be open to challenge. Again, they are small but important amendments and we support them.

There are a number of government amendments in this group. I have read through them and they seem straightforward, but I shall be interested to hear the Minister’s introduction.

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[Baroness Scott of Bybrook (Con)]

It is certainly not the Government’s intention to exclude those groups of providers. In fact, we want to encourage them and make things easier and more transparent for them. I will take a look at Hansard and discuss the issues in Clause 32 with the team. We will make sure that, perhaps in those groupings throughout the summer period, we discuss these issues further; I will make a note to do that. It is absolutely our intention not to make this more difficult for those groups but to make it easier, so we will look at how we can do that if this clause makes things more difficult.

In Clause 33, Amendments 200 and 201 would clarify that, where a supplier does not qualify for the reserved contract, the contracting authority can exclude that supplier at any point in the procurement process. Amendments 203 and 204 to Clause 33 are simply to improve the drafting, as I said.

Amendment 206 would make it clear that suppliers will fail to be eligible for reserved contracts only where they have signed a “comparable contract”, as defined in subsection (7), within the previous three years, not just because such a contract was awarded to them. It ensures that there is no risk of a supplier being penalised where a contracting authority had decided to award a contract to a supplier but, for whatever reason, the contract did not progress.

I turn next to Clause 34. Amendment 209 clarifies that competitive flexible procedures can allow for the exclusion of a supplier from both participating and progressing in the procedure where the supplier is neither a member of a dynamic market, nor a part of a dynamic market—for example, a category of goods or services. The current provision refers only to “the exclusion of suppliers”, and this change clarifies that this means participation and progression in the procurement by, for example, progressing to the next stage of a multi-stage procurement. Amendments 214 and 215 are consequential to this amendment.

Amendment 262 in Clause 48 changes “virtue of” to “reference to” for ease of reading.

Amendment 341 removes the more general reference to “procurement” in Clause 56, to clarify that notification of exclusion is required in all competitive tendering procedures.

Finally, Amendments 427 and 428 are technical amendments to Clause 78: the first to ensure drafting consistency across the Bill and the second to reflect the fact that Northern Ireland and Wales have derogated from this provision and so do not require the threshold-altering powers in subsection (4).

I turn now to Amendment 96, tabled by my noble friend Lady Noakes, which questions why a supplier “must” satisfy the conditions of participation in Clause 18(3)(a) to be awarded the contract, while in Clause 21(6) contracting authorities only “may” exclude the supplier from participating or progressing in the competition. I reassure noble Lords that the two clauses work together: suppliers must satisfy the conditions of participation in order to be awarded the ensuing public contract, and that is what is addressed in Clauses 18(3)(a) and 21(2). Clause 21(6) gives the contracting authority the flexibility to decide when to assess the conditions of participation, and at what point to exclude suppliers that have not met them. Having “may” in Clause 21(6) allows the condition to be assessed during the procedure. For example, when it comes to insurance requirements, a company may not have the full cover initially, but it may have the chance to obtain it before that contract is awarded. I hope that this makes it slightly clearer; if not, I am sure that we can discuss it further throughout the summer months.

I now turn to non-government amendments. Amendment 105 to Clause 19 from the noble Lords, Lord Wallace and Lord Fox—both of whom I hope will be better very soon—proposes to remove the competitive flexible procedure. The practical reality of procurement is that the open procedure is simply not appropriate in all circumstances. The government procurement agreement contains three procedures: open, selective and limited or direct-award tendering. The open procedure is popular where the requirement is well-defined and straightforward; price is likely to be the key feature. There is no pre-qualification of suppliers, any interested party can submit a tender and they must all be assessed.

We want contracting authorities to use the new competitive flexible procedure, which we could not have had when we were in the EU, to design fit-for-purpose procurements that deliver the best outcomes. This may mean including phases such as a prototype development when seeking innovative solutions. Contracting authorities will use it to limit the field by applying conditions of participation to take forward only those suppliers with the financial and technical capability to deliver the contract. Clause 21(1) requires these to be proportionate so as not to disadvantage smaller suppliers.

The competitive flexible procedure also allows for negotiation and discussion of the requirements, which is particularly important to ensure not only that the best value is obtained but that requirements are clearly understood. The ability to negotiate is severely limited under the current EU-derived rules.

Clause 19(3) requires the contracting authority to ensure that any competitive tendering procedure is proportionate, having regard to the nature, cost and complexity of the contract. Amendment 107 from my noble friend Lady Noakes proposes to make these considerations from the perspective of the supplier. We believe that these assessments are better considered by contracting authorities in the round following pre-market engagement. Otherwise it would be possible for prospective suppliers to challenge and assert that a procedure is not appropriate.

To counterbalance the flexibility given to contracting authorities to design a competitive tendering procedure, we wanted to ensure that procedures do not become overly convoluted or burdensome for suppliers. We believe that Clause 19(3) achieves this, as it will force the contracting authority to consider what is proportionate, without suppliers dictating the specifics of the procedure. I understand that my noble friend Lady Noakes requires more clarity, and I am sure we can do that if that explanation did not provide it.

[Lord Scriven (LD)]

I want to come back to the Minister’s explanation about the word “appropriate” and it being wide. I understand that there may be reasons why a fully open procurement would not be wanted. Amendment 105 deals with what is appropriate. The Minister raised an issue relating to prototypes. Clause 18(3)(a) states:

“In assessing which tender best satisfies the award criteria, a contracting authority … must disregard any tender from a supplier that soes not satisfy the conditions of participation.”


If it cannot do the prototype, it would be debarred. I think further clarification is required about the Government’s view about an appropriate situation in which a fully open tendering procedure would not be required.

[Baroness Scott of Bybrook (Con)]

It is obvious that the noble Lord, and probably all noble Lords, need more clarity about this. I do not have any further clarity at the moment, but we will make sure we provide that because it is obviously an issue of concern.

I have just been handed a note to avoid a Hansard correction. To correct something I said about the consistency of Clause 21, I need to refer to Clauses 18(3)(a) and 21(2), which both make clear that conditions of participation must be satisfied. I believe I said Clause 22(2) rather than Clause 21(2). I clarify that we were talking about Clause 21(2), not Clause 22(2).

The competitive flexible procedure also allows for negotiation and discussion of the requirements, which is particularly important not only to ensure that the best value is obtained but that the requirements are clearly understood. The ability to negotiate is severely limited under the current rules—I think I have got past that, but we will keep going.

Clause 19(3) requires the contracting authority to ensure that any competitive tendering procedure is proportionate, having regard to the nature, cost and complexity of the contract. Amendment 107 from my noble friend Lady Noakes proposes to make these considerations from the perspective of the supplier—we have been through all this, and we have agreed that clarity is what my noble friend Lady Noakes requires. Sorry, I went back in my speech. I was looking back because the noble Lord, Lord Scriven, had asked me to go back. I will now go forward.

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[Baroness Neville-Rolfe (Con)]

The point is well made. I would be interested to know how long that Act has been in operation in the United States. One of the concerns I have had, looking at these various provisions in all their complexity, is that we are actually continuing relatively new EU requirements; they came into our law between 2014 and 2016 with a directive and a number of regulations. I am not clear to what extent they have been reviewed to be effective. You need them to be fair and effective, and you need to consider the people who are excluded as well as those who happily champion them—as one does if one works for a big multinational; I have worked for one. My comments are intended to encourage the Committee to look at the detail to ensure that perverse effects are minimised and excluded where they can be.

[Lord Scriven (LD)]

My Lords, this has been a fascinating discussion on a number of amendments that are grouped around what I would call value-based procurement. The values should allow £300 billion of taxpayers’ money to be used to create good business and a solid foundation. We wish to see public money spent in a way that is based on the values we hold as a nation, not just in the UK but elsewhere.

It was interesting listening to the noble Baroness, Lady Neville-Rolfe, who just said very distinctly that a value-based approach could have the effect of destroying competitiveness and productivity for certain companies and exclude them. All the businesses I have worked with—big ones, small ones, social enterprises, small and medium-sized enterprises—want a nudge from government at times to be able to do the right things. When the Government nudge in their procurement, they send a signal to the market that enables business to make decisions based on things other than the bottom line. I tend to find that that is a useful thing for them, rather than a negative thing. Therefore, I think that value-based procurement is really important.

I start by speaking to Amendment 331, signed by my noble friend Lord Fox—as you can see, I am struggling so I will not go on at great length, like the Minister did last week. Clause 59 creates a centralised debarment list that allows Ministers to prohibit suppliers from contracting with public bodies if they fall under the certain exclusionary grounds in Schedules 6 and 7. However, a supplier’s involvement with serious human rights abuses is not listed even as a discretionary ground for exclusion. I am sure that that is an omission by the Government and not a deliberate exclusion. Human rights abuses should be on the face of the Bill as a reason for debarment. You can argue whether it should be mandatory or discretionary—personally, I would like it to be mandatory—but it has to be at least discretionary. The purpose of this amendment is to allow Ministers to debar companies that have proven involvement with serious human rights abuses. I hear what the noble Lord, Lord Alton, said about listing genocide there.

I have a particular interest in Gulf states, particularly human rights abuses in Bahrain. I could keep the Committee for hours on the significant human rights abuses in that country. A number of companies in the UK, both large and small, trade with some of the organisations that are directly linked to human rights abuses in Bahrain. However, under this Bill on public sector procurement, there would be no way of debarring them, even though these companies are sponsoring or are directly involved in working with organisations that are implicated in death, torture and the deprivation of liberty—for at least 20 years, in some cases. So I ask the Minister: why is this exclusion there? Has there been an oversight in not having human rights abuses on the face of the Bill?

I come to a couple of the other amendments that noble Lords have addressed. Amendments 174 and 179 on payment are really interesting and quite important, because cash flow is king, particularly for small and medium-sized enterprises. Within the Bill are assumptions about 30-day payments to public sector organisations. There is an implied assumption in the Bill that the same subcontracting arrangements will take place between the major contractor and the subcontractor, but there is no mechanism for sanctions if that does not happen. That is why I think Amendments 174 and 179 are an interesting way of saying that there will be sanctions, in debarring people from getting public sector contracts.

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We recognise that modern slavery often occurs in countries which are not party to international treaties on forced labour and which are unlikely to prosecute the perpetrators, and where there may be no relevant national laws. Paragraph 3 of Schedule 7 allows authorities to exclude suppliers and disregard their bids where there is sufficient evidence of modern slavery—

[Lord Scriven (LD)]

I have listened very carefully to the description the noble Lord has given. Exactly the same kind of provisions exist in states which do torture, where there are no laws or treaties that those states uphold. So, what is the difference between modern slavery and torture when they take place in a state where the laws and the regime that rules that state do not protect its citizens from either?

[Lord True (Con)]

My Lords, I referred to the position where there may be no relevant national laws. The Government’s submission is that this Bill greatly strengthens the defences we have against modern slavery and the vile abuse of individuals in these circumstances. As I said, this will apply whether or not there has been a conviction or a breach of an international treaty.

Procurement Bill [HL]

Lord Scriven Excerpts

Committee stage
Monday 24th October 2022 Grand Committee

My third amendment is purely to ask a question because I do not understand. Previously we encountered this point where fees would potentially be charged in relation to suppliers in a dynamic market. I did not table an amendment to question it then, but that is in question as well. Here, my amendment would delete Clause 44(7) to find out the purpose of the fee. Suppliers, particularly SMEs, entering a framework might say, “Hang on, we have to incur all the cost of the original competition against the possibility of no subsequent business. Even if there are subsequent awards under the framework, we may well have to bid again and incur additional cost. On top of that, they’re asking us for fees.” From an SME’s point of view, the risks associated with the imposition of fees for procurement begs a question, and I wondered what its purpose was.

[Lord Scriven (LD)]

I apologise to the Committee for being late; I have literally just got off an aeroplane. Like others, I welcome the Minister to her place. I will welcome some of the acrobatics she may have to do on Report now that she is sitting there rather than next to the noble Baroness, Lady Noakes, as she was earlier in these Committee proceedings.

The noble Lord, Lord Lansley, has just spoken a lot of sense. I declare my interest as someone who advises a company that works with frameworks. I have seen some games played with frameworks, though not by the company I advise, with frameworks used for a number of purposes completely alien to why the original contract framework was set. It debars competition and innovation, particularly when the public body decides that it wants something completely tangential to the original framework contract and the original purpose, and allows a company to continue building its commercial relationship with that public sector body without necessarily having the core competences required. It then goes into a lot of partnerships with adjunct companies that have no relationship back to the original company when the framework was initially set.

I support the noble Lord, Lord Lansley, in trying to work out, in his Amendment 249, what the fee purpose is in terms of companies going around the framework. I particularly agree with him on the issue of small and medium-sized enterprises. I think this would be a block in that field for SMEs in particular. Could the Minister explain a little more about the reason for the fee, how it will allow competition and how it will not debar SMEs in particular from this type of framework agreement if it is to continue?

[Lord Coaker (Lab)]

My Lords, we are getting into some detail now. That is the purpose of Committee and it is very constructive and informative. I very much agreed with the points made by the noble Lord, Lord Aberdare, about framework alliances and whether Clauses 44 to 47 include such alliances. If they do not, why not? The noble Lord’s point requires a simple answer: yes, they do, or no, they do not. He has asked an important question about the inclusion of framework alliances.

Similarly, I thought the points of the noble Lord, Lord Lansley, were really well made. Amendments 247, 248 and 249 have been put down specifically to ask the Minister whether the Government’s new subsection (3G) answers some of those points. That is the sort of detail we need to get into, as the cascade principle is really important. I think the noble Lord, Lord Scriven, also supported that.

I have a couple of specific points on the importance of transparency and openness, which we are all striving for. The noble Lord, Lord Fox, asked the Minister about what “value for money” means; that could almost be taken as a trick remark but it is crucial, as these sorts of definitions are really important. Therefore, can the Minister say what “proportionate” means in government Amendment 246? One person’s “proportionate” would be to allow people to get through without proper checks. However, without “proportionate”, the burden on some businesses and suppliers would be completely unacceptable—just too much and unrealistic. It would be helpful for the Committee to understand the use of “proportionate” in new subsections (3A) and (3D) and “may not” in new subsection (3C).

Government Amendment 246 talks about proportionate means of ensuring that suppliers have the relevant

“qualifications, experience or technical ability”

to perform a contract. It would be helpful if the Minister said a bit more about what that means.

More generally, since we are discussing Clauses 44 to 47, can the Minister explain why so many respondents to the Government’s consultation opposed open frameworks? Some 27% of the respondents did so. Is that a high negative response? I am not sure whether it is high or low, but it struck me as quite a lot. The Government did not agree with that view and ploughed on with Clause 47.

On Clause 45(3), can the Minister explain what sort of reasons there could be for a framework to exceed the normal eight years for a defence and security contract and four years for other frameworks? The Government seem to believe there might be a necessity to clarify that through their own Amendment 251, which seeks to clarify some of that but also reflects a concern about the number of years that could apply to a contract. That would be helpful.

Our limited discussion on the use of frameworks has been very important; it has sought to get into some of the details, which are what mean they do or do not work well—sometimes on the basis of what a particular word means. Like many noble Lords, I read the assessment in preparing for this Committee; you can see the point the noble Lord, Lord Fox, made in our earlier debate about a cry for clarity on what the Government are seeking to achieve. What different words mean is crucial. Building on the noble Lord’s plea to know what “value for money” means, a little more about what “proportionate”, et cetera, means in the context of government Amendment 246 would be helpful. The Minister may need a little more time to reflect on that but, if you are seeking a contract under a framework, the word “proportionate” will mean everything—or nothing. It would be very helpful if the Minister could clarify that.

With that, I think the Government have taken some very important steps forward under these clauses.

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[Baroness Thornton (Lab)]

My Lords, I shall speak to Amendments 477A and 486A in my name. I thank my noble friend Lady Hayman, the noble Baroness, Lady Bennett, and the noble Earl, Lord Devon, who is not able to be with us today, for their support.

The amendment addresses procurement investigations. It would add, at the end of line 28 on page 60,

“and the implementation of social value”.

It would require the new procurement investigations authority to be able to investigate the implementation of social value. There are regular reports of public bodies that have secured promised social-value outcomes from contractors—apprenticeships, jobs created, investment in local infrastructure and so on—but these are not delivered. As social value is weighted in tenders, organisations can win tenders to deliver social value but may not always deliver the social value that they have promised.

The amendment would give the new procurement investigations authority the ability to investigate whether public bodies were securing social-value commitments that had been promised and to be able to report on that to Parliament. Currently there is no part of government that is bound to collect information on the implementation of social value. Indeed, the Cabinet Office had started to do this for central government through the social value model, but that is not comprehensive. Social value is just as much value as financial value, and the new procurement investigations authority should take social value seriously. This would have the added benefit of increasing awareness of the importance of social value in the public sector.

Amendment 486A would add a new clause. Because social enterprises and small and medium-sized enterprises often complain about barriers to accessing contracts in the public sector, which this Committee has discussed at some length, the proposed new clause would seek to ensure that the new procurement investigations authority would have expertise from the social enterprise sector and the SME sector so that they could ensure that contracting authorities were carrying out procurement exercises in a way that was fair to the sector.

Despite the Government’s commitment to expanding the role of social enterprises, voluntary organisations and SMEs in winning public sector contracts, that has not taken place. Research by DCMS estimates that only 5% of contracts are being won by voluntary sector or social enterprise organisations. Only one in five pounds of public procurement, 21%, is going to SMEs despite a 33% target. The amendment would give the new procurement investigations authority the expertise to be able to investigate whether contracting authorities were doing what they could to help SMEs and social enterprises to win contracts fairly.

[Lord Scriven (LD)]

My Lords, I am glad to follow the noble Baroness, Lady Thornton, on the issues that she raises. When the Government and Whitehall look through the prism of public sector procurement, that tends to lead to a very centralist approach that is about value for money, not for the taxpayer but for government departments. Sometimes things are not exactly in line with each other. There are many areas up and down this country where social value could really be added to if the Government, through primary legislation, understood what social value was and therefore ensured that in the Bill, when every single public sector procurement body in the land was awarding and using criteria to judge a contract and a supplier’s tender, that became vital.

The second issue on that refers back to something I think my noble friend Lord Fox said earlier, although I was not in the Committee at the time. The definition of such issues regarding social value are vital, because social value means many things to many different people. It is not to put contractors into a straitjacket. They can still innovate as long as there is a definition and a framework of what social value means. It is vital that the Government understand that it needs to be there as a guide for contractors, not as a straitjacket.

Also based on what the noble Baroness, Lady Thornton, said, the voices of the third sector, or the charity sector, and small to medium-sized enterprises need to be central to how procurement and social value are aligned within the Bill and public sector procurement. I remember being leader of Sheffield City Council. The thing that amazed me was the innovation and what happened if we brought the voice of the charity sector and small to medium-sized enterprises into how we were working. We did not call it social value then; it was to improve our place. It was place-based procurement at the time. They could change the dial completely about how procurement was done. We therefore had a view across the authority about how it was done based on some of the words, concepts and ideas that charities and small to medium-sized enterprises had. Those became a policy driver for procurement. It is therefore vital that the Government think carefully about the concept of social value, and what it means in the framework in the Bill, rather than just being loose words which many people define differently, or this will end up not having the maximum value in communities up and down the land.

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[Baroness Thornton (Lab)]

I might as well intervene now too, because the question I would really like to ask the Minister—and it is very nice to see her back in her place, as she was the Minister responsible for putting equal pay on the statute book, and I hope her progressive instincts there might be followed through in this piece of legislation—is about social value. How do we deliver social value if there is absolutely no way of examining it, monitoring it and enforcing where it is not being delivered?

[Lord Scriven (LD)]

Following on from what the noble Baroness, Lady Thornton, has said, and from what the Minister said about how this could not be in the Bill because it is a policy initiative, the procurement objective in Clause 11(1)(b) is “maximising public benefit”, which is a policy issue. All the noble Baroness is trying to do is ensure that social value is looked at by the appropriate authorities. Actually, it is more defined and specific in law, because there is a social value Act but no public benefit Act. The Minister’s answer that it is just a policy issue really does not stack up.

[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.

Procurement Bill [HL]

Lord Scriven Excerpts

Committee stage
Wednesday 26th October 2022 Grand Committee

Like so many of my noble friend’s amendments to the Bill when she was on the Back Benches, it has the interests of small and medium-sized entities at its heart. There is usually a massive imbalance of power between public authorities that are letting contracts and the SMEs with which they are dealing, and there are many stories of the abuses of such relationships. I very much look forward to what my noble friend will say in response to the amendment.

[Lord Scriven (LD)]

I shall speak to Amendment 272 in the name of my noble friend Lord Wallace, to which I have added my name. The Bill includes key objectives, which involve delivering value for money, maximising public benefit, sharing information and acting with integrity. Amendment 272 would ensure that the public benefit included explicit economic, environmental and social factor indicators as part of a list of KPIs. Following on from what the noble Baroness, Lady Noakes, has just said, I would say that the situation is slightly different—it is not just that what is monitored gets managed; what is monitored gets done. That is the issue: it sends a clear signal to those providing the service that the contracting authority sees those issues as an important and vital part of any contract that is let. Amendment 272 would add to the KPIs that anything done as part of the contract should bring about sustainable local improvements in the environmental, social and economic parts of the contract.

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[Lord Scriven (LD)]

My Lords, as I was saying before I was so rudely interrupted by the Division Bell, the concept of Amendment 272 is to ensure that the KPIs support in more detail the public benefit test. There will be economic, social and environmental factors that provide sustainable local improvement. The reason for this is that many times when a provider goes in and provides a service—I speak as a former leader of a council and I have seen it in some of the work I do in public sector reform—the public good that happens, whether it be social or environmental, lasts only while that provider is there: that is, the jobs are dependent on that provider providing that service, or are adjacent to or an adjunct to the work it is providing. This amendment tries to ensure that when public sector contracting authorities are writing their KPIs, they have a view that they should be economic, social or environmental but also sustainable—that is, when the contract ends or the contractor leaves, the things it has put in place are sustainable, rather than being for just a limited period. That is reason behind Amendment 272.

I shall take a little time to speak to Amendment 353AA in the name of the noble Baroness, Lady Hayman of Ullock, to which my noble friend Lord Fox has added his name, which is about the public sector interest test being applied when a service is at present provided by a public sector body and is being outsourced. I want to be clear that this amendment does not stop outsourcing. I do not subscribe to the view that public is good and private is bad, or vice versa. In a mixed market you can get good and bad in both providers. This amendment stops the sometimes very narrow view of public sector contracting authorities that they will outsource without thinking about the wider implications for citizens and the economy of the area.

Let us look at some of the issues in this amendment. Paragraph (c) of subsection (2) of the proposed new clause refers to

“implications for other public services and public sector budgets”.

I have seen outsourcing in social services that has no assessment of what it will mean for working with the NHS. A contract that is purely for one part of what the citizen goes through could fragment the citizen journey or the service.

The other issue is the effect on employment conditions. If, for example, the contract is on lowest price, particularly in a deprived area, it could have the disastrous result, which I have seen, of reducing wage rates, which works against the wider public benefit of increasing prosperity and having better jobs in the area.

While the amendment would not preclude outsourcing, it is important for the wider public benefit test and for ensuring that services, which in many cases join up with another part of the organisation or a different organisation, think through the implications for that service and the citizen’s journey through the service being provided, whether by a public provider or private provider, if part of it is going to be outsourced. I therefore commend this amendment, which, if accepted, would not preclude outsourcing. It would simply get public sector bodies to think more widely about why outsourcing needs to take place.

[Baroness McIntosh of Pickering (Con)]

My Lords, Amendments 370ZA and 370ZB are tabled my name and I thank the noble Baroness, Lady Hayman of Ullock, and the noble Lord, Lord Coaker, for their support which is much appreciated.

The thinking behind these amendments relates to the plight of the wholesale sector, which supplies food and drink to critical public service infrastructure on which we all depend, including schools, hospitals and care homes. According to the briefing I have received from the Federation of Wholesale Distributors, wholesalers are struggling to fulfil these contracts due to unfavourable contractual terms, which are resulting in these businesses making significant losses. That does not bode well for the future viability of the sector. They are facing rising costs and food inflation, which we know has hit 15.1% as of August 2022— this week it looked as though it could be higher still. It leaves the wholesalers unable to negotiate any price increases; or the smaller price increases they have negotiated on certain contracts have been well below inflation. This is an unsustainable circumstance going forward.

Given the situation where price reviews occur only every six months or, in some cases, only once a year, this gives wholesalers very little room for manoeuvre to negotiate price increases. This means that wholesalers are not making a profit on the product and service they provide to their customers. This is affecting the quality of the products they are able to serve to children and the most vulnerable, and the viability of providing catering services in the long term. They would argue that the quality of catering services is of paramount importance, as we have seen with Jamie Oliver’s campaign in hospitals and during the pandemic.

I support the fact that the Government’s food strategy is seeking to drive up standards of public sector food by requiring caterers to use more organic and locally sourced foods. This is not sustainable, however, without funding that matches inflation—it is just not viable going forward. In the federation’s view, small and medium-sized enterprises will be the most affected of all businesses. Without quarterly price reviews, the trend will continue towards market consolidation and homogenisation, driving standardisation not the localisation of publicly produced foods.

I expressed my disappointment previously that the public procurement contracts we signed up to under the European Union conditions have been replaced by the GPA; this is something we need to look at on an ongoing basis. Of course, it is right that the Procurement Bill aims effectively to open up public procurement to new entrants such as small businesses and social enterprises, so that they can compete for and win more public contracts. It is just the case that SMEs are more acutely affected by price increases. They are smaller in scale, less resilient and need to pass the increases on in real time. They do not have the capacity to absorb those increases and, as such, are more vulnerable to these pressures if price increases are not passed on. We can therefore envisage a situation where SMEs are either closing down or being sold to larger national conglomerates. If these conditions continue, the sector believes that this will undo competition and the diverse market that brings a number of benefits to the public sector.

To ensure that the targets in the Procurement Bill are met, to encourage more SMEs to supply contracts and to ensure the continued supply of public sector food—which I think the Committee would sign up to—I ask my noble friend the Minister to consider publishing guidance to instate quarterly price reviews to allow contract price increases more regularly than once a year or every six months, and only if a certain threshold is met—for example, inflation over 5%. This is what I have set out in Amendment 370ZA to Clause 69 and in Amendment 370B to Schedule 8, regarding a review when inflation is 5% or more.

The quarterly price reviews would allow contract price increases more regularly, as I have stated, than either once a year or once every six months, if the threshold is met. I propose that that threshold should be over 5%. I remind the Committee that we have seen record increases in the price of staple goods such as milk, dairy, bread and even pasta, and some of the cheaper products that these public sector wholesalers would seek to provide in the context of the contracts we are discussing this afternoon.

I put on record that public sector caterers are struggling to meet the food standards, being forced to reduce portion sizes and using less UK-grown and produced product, which is against both my better judgment and the Government’s aims. I would like to see the quality of the food used to service public sector contracts improve, under the amendments I have spoken to. Without these amendments, standards will continue to decline to mitigate the rising costs if the Government do not step in to support the industry. A number of wholesalers rely on profitable contracts subsidising loss-making contracts at the moment. However, with the ever-decreasing level of profitable contracts, the balance is tipping towards overall loss-making, which is unsustainable in the long term.

Other advantages of these amendments are that they would enable meeting the government targets which would otherwise not be met in the current climate, and would enable those in this sector to bid for more contracts, which would impact the supply of food and drink to public service infrastructure. Some 95% of wholesalers have said that the current climate and rising costs mean they are unlikely to bid for new contracts, especially ones with unfavourable terms, such as the long pricing review.

I ask my noble friend to respond to these issues to help SMEs and secure more bids for future contracts, in particular by a three-monthly review and a 5% review of inflation. The level of food inflation is pushing up the level of inflation across the piece. We are woefully short on food self-sufficiency, particularly fruit and vegetables. I hold the Minister’s feet to the fire, because we heard from her colleague the Minister for Agriculture in this place, my noble friend Lord Benyon, that the Government are seeking to do something to help produce more fruit and vegetables locally, even to increase production such that we can export. Nowhere is that more important than in the delivery of public sector contracts.

I really regret that we are going backwards, having left the European Union, and are relying on more imported and more expensive food. We should be sourcing more food, whether it is meat, bread or dairy—milk and butter—as all these staples have been hugely impacted by inflation. I urge my noble friend to look favourably on these two amendments.

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I listened with particular interest to the point made by the noble Lord, Lord Scriven, on social care and the need to look at the impact on the NHS in these sorts of cases. I assure him that the decision to pursue an outsource solution would be carefully considered and assessed against the public body’s requirements and capability offering. However, the scope of the Bill begins once a decision has already been taken in principle to approach the marketplace. Therefore, decisions relating to this sit better elsewhere in public spending and other guidance.

[Lord Scriven (LD)]

I am confused by that answer; I do not understand, in practice, what the Minister has just said. There could be at least two public bodies involved in an individual’s care, through social care and the NHS. Can the Minister clarify a little better how the public interest is served when one public body decides to outsource, having an impact on another public body which has no control or say over the contract that has been let, when the client the contract could serve impacts on both bodies?

[Baroness Neville-Rolfe (Con)]

I was trying to make sure that the noble Lord knew that I had listened to his point. There is a point about what is covered by the Bill and what is not, so perhaps I will reflect a little further on how we achieve the best outcome in the sort of circumstances he describes.

Moving on, I thank the noble Lord, Lord Mendelsohn, for his kind words. I look back with great pleasure on the work we did together on those Bills. I very much agree with the noble Baroness, Lady Hayman of Ullock, that he has made a huge contribution in this area. To some extent, his dogged determination has been rewarded with this Bill, which, I think, as I said right at the beginning, makes something of a breakthrough. That is why I am glad now to be the Minister and to make sure that that breakthrough is reflected in a larger share of procurement for SMEs, with payment being more consistently speedy. It is clear that, in a lot of areas, payment is quite good.

The noble Lords, Lord Aberdare and Lord Mendelsohn, have tabled Amendments 353B, 370A and 430A. They would create a process for resolving payment disputes that would mandate escalation to the Small Business Commissioner, who we remember so well, for arbitration and resolution. Going back, I think that the noble Lord, Lord Mendelsohn, wanted me to be the commissioner, but it never happened. The amendments would also require the automatic payment of late payment interest in the event of a contracting authority being found to be in violation of the payment provisions of this Bill.

I believe that this Bill represents a big step forward in tackling late payment, as I have said. However, I believe that these amendments could introduce unwelcome complexity into the system for government suppliers and remove the parties’ ability to be flexible in matters of dispute resolution by tailoring dispute resolution and escalation procedures to particular contracts. There are now—this is an important point—a range of existing mechanisms in place to deal with late payment. Suppliers, including those in public sector supply chains, can raise payment delays with the Public Procurement Review Service, which the noble Lord, Lord Aberdare, kindly drew to our attention and which will work to unblock any overdue payments. It is a well-established service. It has been successful in releasing more than £9 million of late payments to date and has grown in confidence since we passed the Small Business, Enterprise and Employment Act 2015. I assure noble Lords that the PPRS will continue to carry out this function under the new regime to unlock contract-specific instances of late payment.

--- Later in debate ---

Moved by

[Lord Scriven]

404: Clause 74, page 47, line 41, leave out “reasonable”
Member’s explanatory statement
This amendment is intended to probe what actions a contracting authority must take about, and to what extent they must investigate, conflicts of interest and potential conflicts of interest.

[Lord Scriven (LD)]

My Lords, I have never heard such a reception before speaking. I congratulate the Deputy Chairman of Committees on the professionalism with which she handled that. Many noble Lords will know that we sometimes get through less business in a dinner hour, so well done. On a serious note, when we canter through a Bill in that way on the seventh day in Committee, it shows the lack of scrutiny it is getting.

I speak on behalf of my noble friend Lord Wallace on Amendment 404, and in moving that amendment I will also speak to Amendments 407, 409, 410, 412, 413, 421, 422 and 423. This group deals with conflicts of interest in public procurement, and getting the process and the management of those conflicts correct is absolutely vital to upholding the public’s trust in the use of their taxes when contracts are being laid. It has to be said that the new conflicts of interest provisions in Part 5 are a step forward. They impose some positive obligations on authorities to identify conflicts and give them a duty to mitigate them, including by conducting a conflict assessment. The provisions also ensure that conflicts can pertain to Ministers, not just officials taking procurement decisions. This is especially important given the issues with the VIP lane during the Covid procurement.

However, these new provisions do not go anywhere near as far as did the review by Sir Nigel Boardman, which the Government asked for and which was published in May 2021, in that they do not require a centralised register of conflicts that authorities can consult. Nor does the Bill contain sanctions for non-compliance with these measures. A central plank of the Boardman proposals, that suppliers should also be required to make conflict of interest declarations themselves, is also not included in the Bill. Boardman recommended that when there are direct awards with no competition, additional disclosure of conflicts at a more senior level should be required. Again, that is missing from the Bill.

The Boardman review gave 12 recommendations on conflicts of interest and bias. The amendments I referred to earlier try to put in the Bill the recommendations that the Boardman review gave. What is the point of doing the most detailed review asked for by government about conflicts of interest, based on recent history, if it is totally ignored when a Bill on procurement is written and when Part 5, on conflicts of interest, seems to ignore them altogether?

I will not go through all 12 recommendations, but some of them are quite important. Recommendation 18 says:

“Cabinet Office should strengthen its model for the management of actual and perceived conflicts of interest in procurements, following the ‘identify, prevent, rectify’ sequence.”


That is completely missing from the Bill. The Minister may say that some guidance will come out on that from the Cabinet Office. The difference is that this is primary legislation. If an expert has recommended that this should be the prescribed way that the Government do things on procurement to improve it around conflicts of interest, why is the “identify, prevent, rectify” sequence not identified in the Bill?

Recommendation 20 indicates:

“Declarations of interests should be recorded and logged alongside the departmental gift register and, where appropriate, this and other, relevant information should be made available to those responsible for procurement and contract management.”


I ask the Minister where, or if, a central register of conflicts of interest will be made available so that all public sector bodies that are procuring can have access to it. Remember, it is not just government departments at Whitehall that we are talking about: the Bill relates to all public sector bodies apart from the NHS which, even if it is procuring outside this, should have access to conflicts of interest on a central register.

The Boardman review also goes on to suggest the types of people who should be required to declare conflicts of interest; it goes much wider than the Bill. Recommendation 23 says:

“All guidance should make it clear that the requirement to declare and record actual or perceived conflicts of interest applies to all officials or those working on behalf of Cabinet Office equally, including civil servants, contractors, consultants, special advisers, and other political appointees.”


Where do they sit in the Bill? It is not just individuals whose job it is to procure; there are others who will have potential conflicts of interest that need to be made public, and people need to be aware of them.

Recommendation 24 says:

“There should be a clear process for managing risk regarding conflicts of interest.”


Where in the Bill are the process for managing conflicts of interest and the sanctions? What are the sanctions? Will they be left to each individual contracting body, or is there a central view of what the sanctions for dealing with conflicts of interest should be?

Recommendation 28 of the Boardman review says:

“Suppliers should be required to follow similar processes regarding declarations of actual or perceived conflicts of interest at the outset of a procurement, with appropriate sanctions for non-compliance.”


Where in the Bill is such provision? How will the conflicts, or potential conflicts, of interest of those looking to supply be dealt with?

I wish to speak to other amendments in this group that talk about not just direct employees. For example, Amendment 423 says that people who have left public service but are then employed or subcontracted by or give paid advice to a company should not be allowed to do so for a period of six months. That is not just for government but for all public sector bodies. If that is not in the Bill, it will be left to individual councils or individual procurement bodies to make their own rules and there will not be a uniform approach across the public sector. Is it the Government’s view that there should not be a uniform approach across the public sector for conflicts of interest for people who leave the public sector and are going to be employed, subcontracted or paid to give advice, or should it be down to each individual contracting authority outside of government departments to make up their own view? If so, how will suppliers be able to understand that individuals are complying, based on the complexity that will require?

Amendment 422 is a probing amendment to understand how the Government anticipate managing conflicts of interest and to make sure, again, that that is standardised across the public sector, not just what happens under the procurement rules for government departments.

There are a number of issues here, and I know that my noble friend Lady Brinton will raise the NHS and Palantir, where senior officials who were working on a multimillion-pound procurement for IT left the Department of Health and subsequently went to work for a company that was bidding for that particular contract.

These are serious amendments, which, as the new Prime Minister said on the steps of Downing Street yesterday, seek to rebuild trust. Rebuilding trust to ensure that taxpayers’ money is used appropriately and no one is getting an unfair advantage means that we have to have a standardised system to deal with conflicts of interest across the public sector, for all bodies, and a system of managing those in a way that is appropriate. I hope that the Minister will be able to answer those questions. I beg to move Amendment 404.

[Baroness Brinton (LD)]

My Lords, it is a pleasure to follow my noble friend Lord Scriven. I have signed Amendment 423, but I support all his amendments and those of my noble friend Lord Wallace of Saltaire in this group.

My noble friend Lord Scriven has set the scene for the reason why these amendments are needed, with the background of the Boardman recommendations. I want to give one example of how the culture has allowed one particular firm to get its feet very firmly under the NHS desk over the last three years—it is now a bit more than three years—and why, had stronger conflict of interest arrangements been in place that did not permit very senior staff to go and work for someone who is about to bid for NHS contracts, in line with these amendments, we would have benefited.

In April 2020, the United States tech firm Palantir was awarded a contract for an NHS Covid datastore under the Crown Commercial Services G-Cloud 11 Framework. This meant that it did not need to be publicly tendered or the results published. During 2020, campaigning organisations Foxglove and openDemocracy, as well as a number of parliamentarians in both Houses, including my noble friend Lord Scriven and me in the Lords, raised repeated concerns about the contract. It then emerged that part of the cost-effectiveness of this contract was that Palantir bid very low in return for access to every patient’s medical and personal data held on the Covid datastore. No permission had been asked for or given by any individual about this highly confidential data, and of course it breached GDPR—that is not formally within the scope of this Bill.

The first contract, from April 2020, was for three months, and the value of that contract in return for the data was £1—not £1 million but £1. A further continuation contract for a further four months was for £1 million, and in December 2020, a two-year contract was issued, again under the same arrangements, for £23 million. As details started to emerge, and after the public outcry, the contract was ceased in April 2021—not least because Foxglove and openDemocracy had initiated a court case against the Department of Health and Social Care.

What has emerged is that, in 2019, a number of private meetings were held between senior NHS managers and senior managers of Palantir, described by the NHS managers as very positive—I bet they were. A November 2021 National Audit Office report on government contracts during the Covid pandemic found that a lack of transparency and adequate documentation was very evident.

During 2020, Palantir did not just have contracts with the NHS, it had contracts worth £46 million with UK government or public bodies. Palantir, which in conjunction with Cambridge Analytica provided data support for Donald Trump’s 2016 presidential election campaign and for the Vote Leave campaign, is known for working below the radar. I am very mindful of the comments that the noble Lord, Lord Mendelsohn, made earlier about people gaming the system.

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[Baroness Brinton (LD)]

I am grateful to the Minister for allowing me to intervene. I absolutely accept the point about the change to civil servants’ arrangements. The example that I gave is outside the Civil Service, as would be many other contracts issued through this Bill when it becomes an Act. Can she assure me that every member of staff in any body or agency would be covered in the same way?

[Lord Scriven (LD)]

Before the Minister answers that, a number of times in my intervention I highlighted that there must be a standardisation not only for the Civil Service. Billions of pounds of procurement is carried out by non-central government departments. The rules need to be clear and uniform across the procurement process for the whole public sector, not just for government departments. That is a key issue and why many of these provisions need to be in the Bill, so that they are applicable to all public sector procurement bodies.

[Baroness Neville-Rolfe (Con)]

I thank the noble Baroness, Lady Brinton, and the noble Lord, Lord Scriven. I will not continue with the Advisory Committee on Business Appointments, as it sounds as though the Committee is familiar with that. Having experienced it, I would say that it is quite effective.

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[Lord Scriven (LD)]

But this is the whole point of the Boardman review. By not having clear legislation and rules which are applicable across the public sector, we end up with things happening because they fall through the gaps. People in local government, for example, may not be aware of some of the guidance given to departments by central government, because it is not given to local government. It may be given to the ministry, but it does not necessarily filter down.

That is why we should have a standardised approach—which is not chilling. Then, regardless of whether you are in a local authority, the NHS, a central government body or an arm’s-length body, these are the rules on dealing with conflicts of interest. All that these amendments seek to put on the face the Bill is consistency across procurement in the public sector.

[Baroness Neville-Rolfe (Con)]

To come back to how you do it, you can do things in guidance as well as in the Bill. I take the noble Lord’s point that consistency would be helpful, but I have explained that there can be difficulties. I will just add that transparency will be a fundamental pillar of the new regime, which I think we all support. Extended transparency requirements, a single digital platform and so on will mean that decisions and processes can be much more closely monitored in future.

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[Baroness Neville-Rolfe (Con)]

I will look into the point about the Civil Service, but certainly people are very careful about the Civil Service rules when they leave. I say that as someone who left many years ago. The rules are observed by civil servants on the whole and we try to emphasise that. As has been said, what we are trying to do here is have a regime that covers not only the Civil Service but elsewhere. However, as always, my noble friend Lady Noakes has bowled a good ball, so I will look into that.

I turn now to Amendment 422, which proposes to introduce a power specifying how conflicts of interest are to be managed on a day-to-day basis. The Bill covers the plethora of organisations which make up the public sector and gives clear obligations on all contracting authorities to identify and mitigate their conflicts. It would not be wise to start dictating the implementation of such a process for each and every authority, so we do not think the power is right.

My noble friend Lady Noakes has spoken to Amendments 415 and 419 on the definition of a conflict of interest, and the noble Baroness, Lady Bennett, came in helpfully too. I recognise that Clause 74 does not explicitly define “conflict of interest” as it does “Minister”, for example. However, Clause 74(2), combined with the definitions, does give conflict of interest a meaning, so it is correct to say elsewhere, as in Clause 75(5), that conflict of interest has the meaning given by Clause 74.

By inference, then, a conflict of interest is where a personal, professional or financial interest of a relevant person, as set out in Clause 74, could conflict with the integrity of the procurement. Essentially, this is where there is a risk that someone from the contracting authority, who is involved in the procurement, could benefit from taking a decision that might not be in the best interests of the contracting authority itself.

Finally, there is Amendment 417, which would remove Clause 76(4). I reassure my noble friend that the purpose of Clause 76(4) is to help, not hinder, contracting authorities. A perceived conflict, as provided for in Clause 76(4), is where a person might wrongly believe there to be a conflict when in fact no actual or potential conflict arises. We must obviously make sure that the public and suppliers are confident that the public sector is conducting its procurements in a fair and open way. We therefore need to consider what others may perceive about the procurement process. I have asked officials to look at the precise wording in Clause 76(4) to ensure that this is properly expressed and is not misleading. I hope that at this late hour my contributions have helped noble Lords to understand the balance that we are trying to draw and what we are trying to achieve. I respectfully request that the amendment be withdrawn.

[Lord Scriven (LD)]

I thank the Minister. The Committee will have to give her 10 out of 10 for trying to explain, but we might not give as high a score on being convinced that she has alleviated some of our concerns.

Many noble Lords who have spoken on this group have tried to explain that the balance seems wrong. That is the issue in terms of conflicts of interest. The puzzling thing for all of us is that the Government agreed and accepted the Boardman recommendations, and some of them need to be in the Bill. Like other noble Lords, I accept that not all of them need to be, but some do.

These clauses have been written in haste. The noble Baroness, Lady Noakes, gave a definition. Clause 75(2) states:

“Reasonable steps may include requiring a supplier to take reasonable steps.”


So a reasonable step is a reasonable step. Unless the Government come back on Report with some serious amendments to this, I think we on these Benches will want to consult His Majesty’s loyal Opposition to see how we can strengthen this. As other noble Lords have said, this is really important in terms of the public’s perception and their trust that their taxes are being used in a way where no one gets an unfair advantage. That is what these amendments are about.

[Baroness Neville-Rolfe (Con)]

Clearly, trust is important and we are trying to do the right thing here. We are also trying to have a balance so that the interest provisions do not have a chilling effect. I said that right at the beginning. In any event, we are planning to have further meetings between now and Report, and it is something we should add to the agenda.

[Lord Scriven (LD)]

I hope the Minister has heard what I said; this is about getting the balance right. Certain things probably need to change and others might be referred to in guidance. Having said that, I beg leave to withdraw the amendment.

Amendment 404 withdrawn.

Procurement Bill [HL]

Lord Scriven Excerpts

Report stage
Monday 28th November 2022 Lords Chamber

[Lord Scriven (LD)]

Like most noble Lords, probably, I have listened to what has just been said and am more confused now than when the Minister started. I ask a very simple question: if the Bill applied to NHS procurement, as it does to the rest of the public sector, would it not harmonise the procurement of NHS provision, whether clinical or non-clinical, including social care? That would make it simpler, not just for the procurement body but for organisations that might wish to tender for NHS clinical services.

[Baroness Neville-Rolfe (Con)]

That is a point, but I did try to explain in my introduction that there was concern during the passage of the Health and Care Act, to which I was not party, that the NHS arrangements—I see that the noble Baroness, Lady Brinton, is nodding her head. Perhaps she is nodding it negatively.

Procurement Bill [HL]

Lord Scriven Excerpts

Report stage
Wednesday 30th November 2022 Lords Chamber

Moved by

[Lord Scriven]

72: Clause 40, page 26, line 22, at end insert—
“(3A) Provision under subsection (1) must not confer any preferential treatment on suppliers connected to or recommended by members of the House of Commons or members of the House of Lords.”Member’s explanatory statement
This amendment is intended to prevent the future use of “VIP lanes” for public contracts.

[Lord Scriven (LD)]

My Lords, I will also support Amendment 113 in this group in the name of my noble friend Lord Fox, which I have put my name to.

Imagine this House’s response to a public sector procurement Bill or statutory instrument that came before your Lordships’ House with the following provisions. The Government could, without reference to anyone, set up a new procurement channel that was mainly for people who knew Members of the Houses of Parliament, and particularly government Ministers. The companies offering the items would not have to be trading, or could just have a few weeks’ incorporation, and would still be included in the special channel. Normal scrutiny and due diligence would not be required of such contacts. These contacts would have preferential treatment over existing and trusted suppliers. They would be 10 times more likely to get a contract, many running into multi-millions of pounds, than other companies not in that special channel, many of which would have had a trading history of years of supplying relevant, safe and reliable goods and services. In addition, those on the special channel would be able to make three times the normal profit margin before the usual and rigorous value-for-money checks were carried out.

Quite rightly, we would be outraged and would see that as unethical and an unacceptable way to spend billions of pounds of taxpayers’ money. I hope that a fatal Motion would be put so that such provisions were stopped in their tracks. However, that is exactly what happened with the VIP channel set up for PPE in 2020. The findings of the National Audit Office and other reports that have been investigating the VIP channel paint a picture that is not acceptable and should never be part of an ethical public sector procurement process. The National Audit Office reported that companies referred to the VIP channel lane by Ministers, senior MPs and Peers had a success rate for gaining PPE contracts 10 times greater than other companies, many of which had a history of supplying reliable PPE in the other procurement routes. Parliamentary Questions show that 41 out of 111 contracts awarded through the high-priority lane by May 2020 had not gone through the formal eight-stage due diligence process.

If speed is required in public sector procurement, the normal rules of probity and ethical standards cannot and must not be ditched. We know that it leads to some with access to government Ministers’ personal WhatsApp contacts, telephone numbers or email addresses ending up making many billions of pounds for nothing more than having those contacts, and the door is open to the public sector market with the ability to supply goods and services. It is reported that some individuals have made over £29 million in personal gain from a company that was not even incorporated when they were lobbying government Ministers to get in the VIP lane, and indeed, when they eventually landed a multi-million-pound contract, they provided some goods and services that were not fit for purpose and could have put our NHS staff at risk had they been used.

Amendment 72 prevents another VIP lane from being set up that creates special and lucrative routes to market for those with privileged access to Members of the Houses of Parliament, and particularly to those in the Government. It will still allow the Government to procure in an emergency but would ensure that one route to getting to market exists—one doorway, with the same due diligence and rules applied regardless of who made the recommendation of the individual or company, rather than a fast-track and light-touch scheme for those who have a contact who is a senior politician or government Minister.

Without this simple amendment, there is nothing in the Bill to prevent another unethical procurement scandal that could set up a VIP lane and become another get-rich-quick scheme for some who have personal access to government Ministers and senior politicians. As the National Audit Office said, contracts awarded by the department through the parallel channel made up only 3.6% of all contracts awarded but accounted for 52% of expected contract value.

With this in mind, I ask the Minister: what in this Bill would prevent another VIP channel from being set up that is predominantly populated on contracts from senior politicians and government Ministers? I look forward, as I am sure many noble Lords do, to hearing what the Minister has to say to reassure the House that the Bill has provisions that will prevent the kind of scandal that the country saw with the VIP lane set up. It was mainly populated by those who had contact with senior politicians and government Ministers, who made millions of pounds in personal gain for those contracts while going through a regime of much lighter touch than that for those not in the VIP lane. If the Minister cannot convince the House that provisions in this Bill will prevent this from happening again, I am minded to test the opinion of the House.

As a matter of objective, Clause 11 is meant to ensure that, in carrying out public sector procurement, bodies are

“acting, and being seen to act, with integrity”.

Amendment 72 will do exactly that, and ensure probity and integrity, so that never again will taxpayers see their money used in such a cavalier and unethical way as they did with the PPE VIP channel. I beg to move.

[Lord Wallace of Saltaire (LD)]

My Lords, I have tabled Amendment 97 for two reasons. First, it is to ask for an assurance from the Minister that the procurement review unit will be set up, and secondly, it is to put down a strong marker on the reasons that the Minister’s department presented for attempting to exclude my amendment as constitutionally improper.

The Minister will recall that, in the responses to the Green Paper, there was a warm and widespread welcome to the proposal that an autonomous unit should be set up within the Cabinet Office to oversee contracting authority compliance with the new procurement rules and so help to realise the benefits intended from the transformation of public procurement legislation. In turn, the Government’s response gave a clear commitment to set up what it now labelled the procurement review unit. This is not in the Bill, however. Therefore, will the Minister Pepper v Hart that commitment, so to speak, by stating in the House that this remains the Government’s clear intention, and that during the passage of the Bill an effective PRU will be established, along the lines indicated by the Government’s response to the consultation?

On the second issue, the slide presentation to the briefing given to Peers on the PRU between Committee and Report, which I was unfortunately unable to attend, stated that the principle of indivisibility of the Crown means providing statutory powers to Ministers whereby they can direct action to be taken by central government departments—in other words, another part of the Crown—and is not usually provided for in legislation. To do so also risks fettering the non-statutory powers Ministers already hold.

I had not previously heard the principle of the indivisibility of the Crown, nor that this principle inhibited Parliament from including specific instructions to Ministers in legislation. It is, after all, an assertion of prerogative—executive sovereignty against parliamentary sovereignty—although oddly qualified by including the adjective “usually” in its attempted exclusion of legislation.

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[Baroness Neville-Rolfe (Con)]

I meant a noble friend. We intend to issue guidance recommending that contracting authorities include provisions allowing spot checks on the payment performance of supply chain members through their terms and conditions. This does not need to be done in legislation; we are currently exploring options to include it in the model government contract and terms and conditions. As I have made clear throughout, digital tech is integral to these reforms, as the noble Lord said, and we will use it.

I apologise for speaking like this, but I feel passionately that we have learned from the past and that it is important not to overreact to past problems. I have felt this in many areas that I have dealt with in my long life. I respectfully request that the noble Lord withdraws his amendment and the other noble Lords do not move theirs.

[Lord Scriven (LD)]

My Lords, I thank all noble Lords who have taken part in this debate, which is a continuation of what we have spoken about in Committee and on Report. It is about ensuring that, if the Bill—which concerns spending billions of pounds of taxpayers’ money—is to go through, trust, fairness and integrity are central to everything that happens and every penny of taxpayers’ money spent. Every amendment in this group is about that.

I have listened intently and diligently to what the Minister said on my Amendment 72, but the noble Lord, Lord Moylan, made a very important point. In answer to my noble friend Lord Fox, Clause 40 gives exactly the same powers that previous Ministers have had through statutory instruments, and this will get us to the same potential mess that the VIP lanes got us to with PPE. I note everything that the Minister said, but Clause 40 could do away with nearly everything in the Bill because it gives the Government unfettered discretion to set up a fast-track lane, as we have seen before. Giving that amount of power to a Minister in a time of crisis, when all power reverts to the Minister and those who are close can have privileged access to contracts, as we have seen, means that I wish to test the opinion of the House on this occasion.

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[Baroness Neville-Rolfe (Con)]

I do take these issues seriously and I commented on diversification, which I have personally been involved in. It is because there is a large amount of trade with China that this cannot be changed overnight—and there might not be a case to do so in non-strategic areas. Inflation is very important and the opening up of Asia has historically been helpful in this country. The Prime Minister said in his speech that we must be realistic and clear about China, but that obviously does not mean we should abandon our values.

It goes without saying that practices such as slavery and human trafficking have no place in government supply chains. We have shown our determination to address modern slavery in many ways, including in the Bill. I draw my noble friend’s attention to the fact that under Clause 27, contracting authorities must ask suppliers to provide details of their intended supply chain for the contract. Authorities can consider whether a subcontractor is subject to a ground for exclusion such as modern slavery. If they conclude that this is the case and that it has failed to self-clean, the lead supplier itself is liable to be excluded from the procurement if it does not take the opportunity to remove the subcontractor from its supply chain. However, we must recognise the complexity of the issue.

My noble friend’s amendment says that

“The Secretary of State must … make provision”


in procurements and contracts to eradicate slavery and human trafficking, and that this is to be done by secondary legislation, but I fear that the amendment fails to reflect the sheer complexity of the matter. Regulations cannot specify precisely which award criteria might be appropriate to address the risk of slavery and human trafficking in every different procurement: this depends on the nature of the particular contract being tendered, including what is being purchased and the likely nature and location of supply chains. The right vehicle to help contracting authorities address slavery and human trafficking risks is in guidance, and there is already comprehensive guidance setting out the action that departments must take. This is 46 pages long and includes sections on managing risks in new procurements, assessing existing contracts, taking action when victims of modern slavery are identified, supply chain mapping, useful tools, training and questions to ask.

My noble friend will know that I have committed to put the matters addressed in the guidance on a statutory footing as part of the national procurement policy statement, provided for under Clause 12 of the Bill. This would mean that all contracted authorities would have to have regard to that guidance, which I think the noble Baroness can see is a significant step forward.

Finally, I note that the draft provisions in the amendment go significantly beyond the language in the Health and Care Act with which it was my noble friend’s stated intention to bring the Bill into alignment. Amendment 141 also creates a strong expectation that the Minister will make regulations, and that they will cover the matters referred to in the amendment, so it is effectively a must.

I know that people are looking forward to getting to the end of this debate, so I will not go through the problems with proposed new subsection (5)(d) to (f), but I will ask noble Lords to note that this will be burdensome to contracting authorities as well as small businesses. I know that my noble friend does not much care about the latter, but there might be wider concern about the gumming-up of contracting authorities in this matter when we have already made arrangements in the Bill to give modern slavery much more focus, and have added that to the relevant schedules.

We believe that proposed new subsection (5)(f), for example, is disproportionate and contrary to the open principles of our procurement regime, as well as to the interests of efficiency, value for money and common sense. Moreover, countries and regions that pose risks change over time, and that is another reason to use guidance, and not this Bill, on this matter.

Finally, I say to my noble friend Lord Blencathra that we should remember that the new regime will give broader exclusion powers to contracting authorities—he referenced Huawei—which will have primary responsibility for applying the exclusions regime.

In closing, I respectfully ask the noble Lord, Lord Hunt, to withdraw his amendment, but I emphasise the progress that this Bill has made, and I therefore find some of the comments on this group a little disappointing.

[Lord Scriven (LD)]

Just before the Minister sits down, so we understand, because some may want to press this to a Division, I ask: what would the Government’s intent be if this Bill was to pass with a debarment list, particularly with regard to companies that the Government no longer wish to deploy their surveillance equipment in the UK? Would such companies go on the debarment list, or would it just be down to guidance to determine whether such equipment is purchased by non-central government bodies?

[Baroness Neville-Rolfe (Con)]

If the noble Lord looks at Schedule 6, which is the criteria for the debarment list, he will see that it includes modern slavery and security, so there is no reason why those could not be used in an appropriate way. I hope that helps.

[Lord Scriven (LD)]

My question was: is it the Government’s intention to use the debarment list for these types of companies, or is it still going to be down to guidance?

[Baroness Neville-Rolfe (Con)]

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