Procurement Bill [HL]

Lord True Excerpts

2nd reading
Wednesday 25th May 2022 Lords Chamber

Moved by

[Lord True]

That the Bill be now read a second time.

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

Since the British people voted to leave the European Union, and we finally got it done, this country is being freed from many bureaucratic and process-driven regulations that stifled our country and businesses for many years—

[Noble Lords]

Oh!

[Lord True (Con)]

Noble Lords opposite laugh at the concept, but one of the most prominent of these regulations was the EU public procurement network. Frankly, I would have thought that noble Lords would have heard that cry from businesses up and down this country. We now have the opportunity to reform it. I am delighted that the Second Reading of this important Bill has come to your Lordships’ House because it has a particular capacity to scrutinise complex matters. I look forward to working with your Lordships across the House on that basis.

Public procurement is one of the most important and influential duties of Her Majesty’s Government: £1 in every £3 of public money—some £300 billion a year—is spent on public procurement. Imagine the power of the most efficient and effective use of that money every year. Imagine the extra small businesses that we could help to hire more workers, expand their operations and contribute to the wealth of this nation. Imagine the efficiencies that we could achieve so that we could spend more on our National Health Service and other vital public services.

The Procurement Bill reflects over two years of intense policy development—I pay tribute to all those involved—a Green Paper, government responses and meetings with hundreds of stakeholders. This work is being carried forward by my right honourable friend the Minister for Government Efficiency, Mr Rees-Mogg. The Bill will reform the UK’s public procurement regime, making it quicker, simpler, more transparent and better able to meet the UK’s needs, while remaining compliant with our international obligations. It will introduce a new regime that is based on value for money, competition and objective criteria in decision-making. It will create a simpler and more flexible commercial system that better meets our country’s needs, and it will more effectively 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.

Before rising to speak, I listened to your Lordships’ concern on the matter of human rights abuses in China; I agree with many of the comments that were made. The Bill will strengthen the approach to excluding suppliers where there is clear evidence of their involvement in modern slavery practices—for example, in the increasing number of reports of human rights abuses in Xinjiang. Running through each part of the Bill is the theme of transparency. We want to deliver the highest possible standards of transparency in public procurement, and the Bill paves the way for that.

Leaving the EU has provided the UK with the responsibility and opportunity to overhaul the public procurement regulations. The current regimes for awarding public contracts are too restrictive, with too much red tape for buyers and suppliers alike, which results in attention being focused on the wrong activities rather than on value for money. There are currently over 350 different procurement regulations spread over a number of different regimes for different types of procurement, including defence and security. The Procurement Bill will consolidate these into a single regime that is quicker, simpler and better meets the needs of the UK. We have removed the duplication and overlap in the current four regimes to create one rulebook which everyone can use. The Bill will also enable the creation of a digital platform for suppliers to register their details once for use in any bids, while a central online transparency platform will allow suppliers to see all opportunities in one place. We hope that this will accelerate spending with SMEs.

This is a large and technical Bill. It includes a number of regulation-making powers, and I have no doubt that your Lordships will want to consider those carefully. We submit—and hope to convince your Lordships—that these powers are necessary to ensure that the legislation will continue to facilitate a modern procurement structure for many years to come, so that we can put in place a lasting model which will allow us to keep pace with technological advances and new trade agreements, and to stay ahead of those who may try to use procurement improperly. As we continue to scrutinise this legislation, we will revisit some of the powers included and will seek to improve on those, if necessary. I also accept that there are some areas that will need refinement, and we will come back at Committee with appropriate amendments.

I will now provide a more detailed overview of some of the key aspects of the Bill. Turning first to territorial application, we have delivered this Bill in a spirit of co-operation with the other nations of the United Kingdom—I welcome this. As part of the policy development process, we welcomed Welsh and Northern Irish policy officials into our team so that they had a critical role in shaping this legislation from the very beginning. The result is legislation whose general scope applies to all contracting authorities in England, Wales and Northern Ireland. This will ensure that contracting authorities and suppliers can benefit from the efficiencies of having a broadly consistent regime operating across the constituent parts of the United Kingdom. The Scottish Government have opted not to join the UK Government Bill and will retain their own procurement regulations in respect of devolved Scottish authorities. This is similar to how the current regulations operate, with the Scottish Government having transposed the EU directives into their own statute book. There may be some in both Houses who will regret this. I am sure that we would all welcome our Scottish friends if they wished to join the new system proposed by the Bill; taxpayers and public services alike would benefit across the whole United Kingdom.

Part 1 of the Bill sets out which authorities and contracts it applies to. It covers contracts awarded by most central government departments, their arms-length bodies and the wider public sector, including local government and health authorities. This also includes contracts awarded by utilities companies operating in the water, energy and transport sectors, and concession contracts. The Bill also sets out a small number of simpler rules which apply to lower-value contracts, and it makes provision to carve out those procurements regulated by the Health and Care Act in order to ensure clarity about which regime applies.

The Bill consolidates the current procurement regimes and therefore extends to defence and security contracts. Defence procurement will benefit from the simplification and increased flexibility of the core regime. There are a limited number of derogations that meet the specific needs of defence and security procurements, and which will support delivery of the Defence and Security Industrial Strategy published in March 2021. A national security exemption has also been retained to protect our national interest. The Bill also includes a separate schedule to enable reforms to the Single Source Contract Regulations 2014. The proposed reforms seek to ensure that these regulations fully support the delivery of the Defence and Security Industrial Strategy by supporting a more strategic relationship between government and the defence and security industries. My noble friend Lady Goldie will be assisting your Lordships on these provisions.

Part 2 of the Bill is focused on the principles and objectives that must underlie the awarding of a public contract. Contracting authorities must have regard to delivering value for money, maximising public benefit, transparency, and acting with integrity. Integrity must sit at the heart of the process. It means that there must be good management, prevention of misconduct, and control to prevent fraud and corruption.

Part 5 of the Bill sets out the particular requirements on contracting authorities to identify and manage conflicts of interest.

Public procurement should also support the delivery of strategic national priorities, and this part of the Bill makes provision for a national procurement policy statement and a Wales procurement policy statement to support this.

In Part 3, the Bill sets out how a contracting authority can undertake a procurement and award a contract. Competition is at the heart of the regime. The Bill introduces a new procedure for running a competitive tendering process colloquially known as the “competitive flexible procedure”—I am not quite sure how colloquial that is—ensuring for the very first time that contracting authorities can design a competition to best suit the particular needs of their contract and market.

There will continue to be a special regime for certain social, health and education services, specifically identified by secondary legislation, which may be procured as “light-touch contracts”, leaving room for authorities to design procurement procedures that are more appropriate for these types of services. These light-touch contracts are still subject to the necessary safeguarding requirements.

The Bill also continues the existing ability to reserve certain contracts for public service mutuals and for supported employment providers. There are a limited number of circumstances in which it may be necessary to award a contract without competition. The Bill sets these out, including new rules governing the award of contracts to protect life and public order.

Part 3 also sets out the circumstances in which a supplier may be excluded from a procurement due to serious misconduct, unacceptably poor performance or other circumstances which make the supplier unfit to bid for public contracts. Contracting authorities will be able more easily to reject bids from suppliers which pose unacceptable risks.

Part 3 also legislates for the introduction of a public debarment list for serious cases of misconduct. For far too long, too many unscrupulous suppliers have continued to win public sector contracts due to the ambiguity of the rules, multiplicity of systems and lack of central effective oversight.

The important work on procurement does not stop once a contract has been awarded, so Part 4 of the Bill sets out steps that must be taken to manage a contract. This includes the strengthening of rules ensuring that suppliers are paid on time and new requirements to assess and publish information about how suppliers are performing.

Running throughout the Bill are requirements to publish notices. These are the foundations for the new standards of transparency which will play such a crucial role in the new regime. Our ambitions are high, and we want to ensure that procurement information is publicly available, not only to support effective competition but to provide the public with insight into how their money is being spent. Part 8 of the Bill provides for regulations which will require contracting authorities to publish these notices, resulting in more transparency and greater scrutiny.

In respect of Covid-19 contracts, the Government are clear that all offers for PPE, regardless of the route through which they were identified, underwent rigorous financial, commercial, legal and policy assessment led by officials from various government departments.

Part 9 details what remedies are available to suppliers for breach of the new regime by contracting authorities where that has resulted in loss or damage. Having an effective and well-functioning remedies regime is essential to the successful operation of any public procurement regime.

Any claims made during an applicable standstill period—between the award decision and the entering into of the contract—will result in the procurement being automatically suspended. We will introduce a new test for the court to consider, when hearing applications for the automatic suspension to be lifted, that is better suited to procurement than the one currently applied.

Part 10 of the Bill gives an appropriate authority oversight over contracting authorities and the power to investigate their compliance with this new Act as part of a new procurement review unit.

The UK is already party to a number of international agreements which guarantee valuable market access for UK suppliers. For example, our membership of the WTO’s Agreement on Government Procurement gives British businesses access to £1.3 trillion in public procurement opportunities overseas. Access to these markets is a two-way street and requires the UK to ensure that treaty state suppliers have equivalent access to UK markets. Part 7 prohibits a contracting authority from discriminating against suppliers from those states. This part also contains a power to make regulations specifying the agreements listed in that schedule. This provides greater flexibility to be able to extend the procurement regime to cover matters covered by the UK’s international procurement agreements, both current and future. This is a well-defined and tightly restricted power which will enable the procurement aspects of future trade agreements to be enacted efficiently, but I have no doubt we will discuss this in Committee. It is not an open door to changing UK procurement regulations to meet international commitments. This power allows only for the extension of the UK procurement regime to cover overseas suppliers covered by such agreements. Amendment of the UK’s procurement rules is outside the scope of this power, even if it were to be required as part of an international agreement. It would not, for example, allow the opening up of NHS clinical healthcare procurements to private providers from any state. To do so would require broader legislative changes, and this power has been carefully drafted so as not to allow for that.

In conclusion, there has never been a piece of UK procurement legislation as comprehensive as this. I hope that I will be able to demonstrate, in our discussions on the Bill, how this Government plan to reform procurement so that we can collectively boost business, spread opportunity, level up the country and strengthen our union. I very much look forward to taking the Bill through your Lordships’ House and I will be keen to hear any questions and suggestions your Lordships may have, today and throughout our proceedings. I commend the Bill to the House, and I beg to move.

--- Later in debate ---

[Lord True (Con)]

My Lords, I thank very much all those who have taken part in the debate. Myriad points have been raised from all sides of the House. I never know what the usual channels are deciding, but it is probably a good thing that, as I understand it, we are not going into Committee for some time because I can feel a compendious letter to your Lordships coming on, which might be as long as the Explanatory Notes.

Your Lordships will forgive me if I do not deal with every detailed point; I will try to address some of the main themes of the debate, which were expressed very well by the noble Baroness, Lady Hayman, when she opened and the noble Lords, Lord Coaker and Lord Wallace, in summing up. We will not agree on all these things. Certainly, in some of the speeches from the other side, there was a yearning to impose policies on the private sector—on people outside government. The high-water mark was the speech of the noble Lord, Lord Hendy, which I guess was the counterpoint to the low-water mark—I am not sure there was any water in it at all—of the speech of my noble friend Lord Moylan. To impose your political objectives on a nation, you have to win an election and form a Government. What we need to do—there was great support and great consensus across the House on this—is put together a framework that we could all work with to provide clarity, simplicity and, yes, transparency, which I will come on to, for those seeking to provide to public procurers.

An important speech on defence was made by the noble Baroness, Lady Smith, and the subject was also alluded to by the noble Lord, Lord Coaker. My noble friend Lady Goldie will respond in writing on the points made but, obviously, when we get into Committee, we will be able to address the points.

Points were raised about control, management and remedies. The noble and learned Lord, Lord Thomas, put forward some ideas. We will reflect on those but, basically, the law of the land is the framework; my noble friend was right.

Many noble Lords alluded to Covid-19 procurement. I understand that but we need to look forward. While the debate was going on, I looked this up on my machine and saw that in April 2020 the leader of the Liberal Democrats was calling for all red tape to be swept aside to get PPE. People in other parties were saying the same. Yes, mistakes were made, but when you make mistakes you must learn from them. We are putting together a regime that will deliver more comprehensive transparency requirements, clear requirements on identification, management of conflicts of interest and so on. It is right that we should address those things, but the priority of the Government—indeed, of all of us in all parties—as the pandemic we knew so little about arose, was to save lives. I acknowledge that there are lessons, but I hope that when we look at how the Bill is structured, we will see that we have an improved framework for addressing all aspects of procurement.

The noble Lord, Lord Alton of Liverpool, and others rightly addressed the issue of human rights. We will discuss this in Committee. I had the pleasure of discussing it with the noble Lord before, as he was kind enough to say. Certainly, modern slavery has no place in government supply chains; I affirm that strongly. I accept that the current rules on excluding suppliers linked to modern slavery are too weak. For example, they require the supplier to have been convicted, or for there to have been a breach of international treaties. These rules are not capable of dealing with some of the issues that we see.

We are making explicit provision in the Bill to disregard bids from suppliers known to use forced labour or to perpetuate modern slavery in their supply chain. Authorities will be able to exclude them where there is sufficient evidence; they do not need to have a conviction. We are seeking to respond in this area and no doubt we will be probed further.

One issue raised right from the start by the noble Baroness, Lady Hayman, was that of principles. A lot of people have said that this was in the Green Paper but is not in this Bill. A Green Paper is a basis for consultation and reflection. A Bill is the proposition that the Government put before Parliament and this is the proposition that we are putting before Parliament. The Bill splits the procurement principles into a group of objectives and rules to help contracting parties understand what they are obliged to do. The rules on equal treatment, now termed “same treatment”, in Clause 11(2) and (3) are obligations that set minimum standards in plain English that contracting authorities must follow on treating suppliers in the same way to create a level playing field. Non-discrimination, in the context of the Bill, means discrimination against treaty state suppliers on the grounds of nationality, which is a concept different from non-discrimination in the UK market. The national rules on non-discrimination in the Bill can be found in Clauses 81 to 83.

There were a number of changes to the principles. For example, the procedural transparency obligations in the Bill are complemented by a new information-sharing objective in Clause 11(1)(c), which will provide clarity to contracting authorities on exactly what they need to publish. There is also no need for an objective to maximise competition in procurement processes under the Bill, as procedural obligations start with the use of open and fair competition, unless there are legitimate grounds to dispense with or narrow competition. The most obvious of those would be special cases for direct award.

I acknowledge that transparency has been a key ask for the House. The House expects that transparency will be improved. We believe that the Bill does this. We are extending the scope of publication requirements to include planning and contract performance, in addition to current requirements to publish contract opportunities and contract awards. By implementing the open contracting data standard we will publish data across the public sector so that it can be analysed at contract and category level, and compared internationally. The new regime will also establish obligations on contracting authorities to capture potential conflicts of interest for individuals working on procurement additionally, or mandate the publication of a transparency notice whenever a decision is made to award a contract using a procedure as a direct award. This will all be supplemented by a comprehensive training programme that will be available to contracting authorities, which I will come back to later.

We remain committed to our aim to embed transparency by default through the commercial life cycle. We recognise and make no apology that this new regime seeks to do that. The new central digital platform will be designed to make complying with the new transparency requirements automated and low cost. We intend to make data analysis tools available to contracting authorities, which will ensure that they can use the data available to drive value for money.

Taxpayers have a right to see how public money is spent. There is abundant evidence of public engagement with contracting information, and it increases as the data improves. Because the data will be more comprehensive it will be more valuable and, we believe, better used. I have no doubt that we will be tested on that, but I assure the noble Baroness opposite that it is something we are extremely determined to achieve.

On social objectives, I was asked by a number of noble Lords how the Bill will help with achieving net zero. I accept that the Bill does not include any specific provisions on the Government’s target to achieve net-zero carbon emissions by 2050, but it will require contracting authorities to have regard to national and local priorities as set out in a national procurement policy statement to be published by the Government, and the Wales procurement policy statement to be published by Welsh Ministers. Many noble Lords have given notice that they will want to return to examination of the national procurement policy statement, how it will operate and how it will go forward, but there are statements in there.

Public sector buyers are able to structure their procurements so as to give more weight to bids that create jobs and opportunities for our communities, where this is relevant to the contract being procured. This is absolutely in line with the concept of value for money. Social value in procurement is not about a large corporate’s environmental, social and governance policies but about how the contract can be delivered in such a way that it delivers additional outcomes, such as upskilling prison leavers, which I think someone referred to.

Delivering value for taxpayers should certainly be the key driver behind any decision to award contracts to companies using public money, but again, public sector buyers will have to have regard to the national policy statement. The Bill will take forward a change from “most economically advantageous” to “most advantageous” to reinforce the message that they should take a comprehensive assessment of value for money, including the wider value of benefits, in the evaluation of tenders.

I know that many of your Lordships want to see and have asked for buying British. Public sector procurers are required to determine the most advantageous offer through fair and open competition. We confirmed in December 2020 that below-threshold contracts can now be reserved for UK suppliers and for small suppliers where it is good value for money. This applies to contracts—in those strange figures in the Bill that arise from international treaty—with a value below £138,760 for goods and services, and £5.336 million for construction in central government.

Above those thresholds, we need to act in line with our international obligations. A blanket “Buy British” policy would conflict with the UK’s international obligations to treat suppliers from other countries on an equal footing. The requirement for fair and open competition is a two-way street because it gives UK firms access to other markets. Within the UK, on average, just over 2% of UK contracts by value were awarded directly to foreign suppliers between—

[Lord Fox (LD)]

I thank the Minister for giving way. I am confused and I am sure he can help me. Clause 82(1) specifically says:

“A contracting authority may not, in carrying out a procurement, below-threshold procurement or international organisation procurement, discriminate against a treaty state supplier.”


The Minister just said the opposite of that in the case of below-threshold procurement. The Bill is very clear that a below-threshold procurement does not let off the contracting authority from having to give the contract to a treaty state supplier.

[Lord True (Con)]

My Lords, I was hoping to make progress and I know that your Lordships would like to conclude these matters. As the noble Lord says, those clauses refer to international treaty obligations. What I was saying was in reference to a contract to let; I was asked very pertinently by the noble Lord, Lord Whitty, for example, about local authorities buying locally, and I repeat what I said: below-threshold contracts can be reserved for suppliers located in a particular geographical area. If international issues arise, that is a different matter. This policy was set out in the Government’s Procurement Policy Note 11/20.

My noble friend Lord Lansley and many others, including the noble Baroness at the start, asked me about innovation. The legislation will put more emphasis on publishing pipelines of upcoming demand, procurement planning and pre-market engagement so that businesses can properly gear up to deliver and offer the best innovative solutions. It will have a new competitive tendering procedure which will enable contracting authorities to design and run procedures that suit these markets. For example, it will allow them to contract with partners to research, develop and eventually buy a new product and service in a single process. The new rules will make it clear that buying innovation does not apply only to buying something brand new but can be about developing an existing product to meet different requirements.

The noble Lord, Lord Stevens, the noble Baroness, Lady Brinton, and others asked about the health service and the relationship with the DHSC. These reforms sit alongside proposals to reform healthcare commissioning which have been enacted through the Health and Care Act. We recognise the need for integration between local authorities and the NHS, both for joint commissioning and integrated provision, and we will work closely with the Department of Health and Social Care.

I repeat: the public procurement provisions will not result in the NHS being privatised. The procurement of clinical healthcare services by NHS bodies will be governed by DHSC legislation and is separate to the proposals in the Bill. However, the non-clinical services, such as professional services or clinical consumables, will remain part of the Bill. Clause 108, which I agree is widely framed as it sits in the Bill, is needed to ensure that it neatly dovetails with any regime created under the Health and Care Act, providing clarity. Obviously, we will have that probed.

Accessibility was another theme that was raised by the noble Lords, Lord Whitty and Lord Fox. The Government remain committed to ensuring that public procurement drives value for money, and that includes better outcomes for disabled people, as it must. The Bill does not dictate how technical specifications may be drawn up, only what is actually prohibited, as set out in Clause 24. However, there is a clear expectation that when contracting authorities set technical specifications for procurement, they do so in a way that takes into account accessibility criteria for disabled persons. Clearly, this is an important matter that requires further consideration, and we commit to doing that.

Training is important, and the training package will be made available in good time for users to prepare for the new regime being implemented. That is why we have committed to six months’ notice before going live, and the training will be rolled out. The Cabinet Office will provide both funded training and written guidance and learning aids, covering the range and depth of knowledge requirements for those operating within the new system. The online learning will be free at the point of access for contracting authorities. The knowledge drops will be freely accessible for all via YouTube, and the written guidance and learnings will also be free and accessible for all via GOV.UK.

The noble Lords, Lord Mendelsohn and Lord Aberdare, asked some pertinent and specific questions about small businesses, and I will certainly make sure that they are answered. This legislation will help SMEs to win contracts for many reasons: bidders will only have to submit their core credentials to the single platform once, for example, making it easier and more efficient to bid. The single transparency platform, or single sign-on, means that suppliers will be able to see all opportunities.

The new concept of dynamic markets, which we will explore, is intended to provide greater opportunity for SMEs to join and win work in the course of a contracting period. The Bill will ensure that subcontractors in chains will also benefit from prompt payment obligations.

There are many other ways in which we intend to help SMEs. The noble Lord, Lord Wigley, asked about the great Principality of Wales. Wales will, as he knows, have the power to publish its own procurement policy statement, in which it can set out its own local priorities for communities. We have worked closely with the Welsh Government to ensure that there is continuity for Welsh contracting authorities. For the first time, Welsh Ministers will be able to regulate the procurement of some goods and services in Wales by some cross-border contracting authorities. But in our judgment, it is right that, where the scope of a procurement extends outside Wales into the rest of the UK, the UK rules should apply.

Publicly funded housing associations would be in scope of the contracting authority definition. However, I am advised that privately funded providers of social housing would not be in scope because they do not meet either the funding or the control requirements. I will write to the noble Lord further about this.

I was going to address points about data collection, but—

[Lord Cormack (Con)]

Write a letter.

[Lord True (Con)]

I will indeed write a letter. It is very helpful to have my noble friend write my speeches for me.

I will answer other points but, to conclude, I thank noble Lords for their extremely intelligent, thoughtful and well-considered remarks, which the Government will consider in Committee. Our proposals have been consulted on extensively and we believe that they are common sense, but we can always gain from listening to your Lordships. In that spirit, I hope that your Lordships will support these proposals as they progress through the House.

[Lord Wallace of Saltaire (LD)]

I do not want to detain the House, but, since my noble friend Lord Strasburger made some serious points about a major contract, could the Minister possibly say that he will undertake to meet him and others to respond to some of the points he made?

[Lord True (Con)]

The noble Lord made a speech that went wide of the Bill. I will look at what he said in Hansard and respond thereafter. I make no commitment at this point.

Bill read a second time and committed to a Grand Committee.

Procurement Bill [HL]

Lord True Excerpts

Committee stage
Monday 4th July 2022 Grand Committee

Moved by

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

1: Before Clause 1, insert the following new Clause—
“Procurement and covered procurement
(1) In this Act—(a) “procurement” means the award, entry into and management of a contract;(b) “covered procurement” means the award, entry into and management of a public contract.(2) In this Act, a reference to a procurement or covered procurement includes a reference to—(a) any step taken for the purpose of awarding, entering into or managing the contract;(b) a part of the procurement;(c) termination of the procurement before award.(3) In this Act, a reference to a contracting authority carrying out a procurement is a reference to a contracting authority carrying out a procurement—(a) on its own behalf, including where it acts jointly with or through another person other than a centralised procurement authority, and(b) if the contracting authority is a centralised procurement authority—(i) for or on behalf of another contracting authority, or(ii) for the purpose of the supply of goods, services or works to another contracting authority.(4) In this Act, “centralised procurement authority” means a contracting authority that is in the business of carrying out procurement for or on behalf of, or for the purpose of the supply of goods, services or works to, other contracting authorities.”

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

My Lords, in moving Amendment 1 I will speak to the first group of amendments. Before so doing, I give notice to the Committee that Amendment 528—which I discovered only this morning had been grouped with this group, but which refers to matters relating to the health service—has been degrouped, because it is logical and to the benefit of the Committee that we discuss issues relating to the NHS part of the Bill together. I will address all the other amendments in this group.

I start by acknowledging and sincerely apologising for the number of government amendments. At Second Reading, in what I thought was all candour at the time, I said that I recognised there were areas of the Bill that would need refinement in Committee. However, the volume of amendments is still regrettable. I assure noble Lords that many of the amendments in this group and others are narrowly focused and technical in nature. We are putting them forward now only to ensure that the Bill functions properly and effectively.

We have issued a Keeling schedule setting out where the range of government amendments will fit in if your Lordships are pleased, eventually, to accept them. The bulk of the amendments in this group and others do not change the general policy intent of the Bill. Indeed, some of them serve to reflect more fully the original policy objectives as set out in the Government’s Green Paper and subsequent responses to it. I know from discussions at Second Reading and in the engagement I have already had with many of your Lordships—which I undertake to continue, not only between Committee and Report but, in the light of concerns that have been expressed, during Committee to clarify anything that is concerning noble Lords—that many noble Lords wish to get closer to the original policy objectives. That is evident from the number of non-government amendments that have been proposed, which we will be discussing. That is not an indication necessarily that we will have a meeting of minds on those, but some of them flow from that.

In many cases the need for amendments has been highlighted by external organisations. We are grateful for their scrutiny and input into improving the Bill. The interconnected nature of the Bill inevitably means that a single small amendment to a definition in one clause leads to multiple amendments to reflect the same definition where it features in later clauses to ensure coherence and consistency. Obviously, that frequently happens in the passage of legislation.

I repeat that I accept with all sincerity that the number of government amendments is not welcome and is undesirable. However, their end effect, when your Lordships have had the opportunity to reflect on them fully, of providing greater legal clarity will be beneficial to the Bill as a whole and to the large procurement community that will use it for many years to come.

The first group contains some of the Government’s amendments with the most general effect on provisions in the Bill, though these remain technical in focus. Amendments in this group relate to the introduction of the concept of “covered procurement” and to the devolved Administrations.

The proposed new clause before Clause 1 includes technical amendments to the definition of procurement and, as I just said, the introduction of the term “covered procurement” to distinguish between the categories of contract subject to different obligations under the Bill. “Covered procurement” refers to those contracts fully regulated by the Bill’s provisions; “procurement” refers to those contracts that are less regulated but none the less catered for to an extent, such as the below-threshold contracts and international organisation procurement. These changes recognise obligations under various trade agreements. The group also contains a number of consequential amendments to reflect this amended definition throughout the Bill.

Other amendments in this group did not originate from the Government but were requested by the devolved Administrations to amend how the legislation applies in Wales or Northern Ireland. As I said at Second Reading, we have been very grateful for discussions with and input from colleagues in Wales and Northern Ireland. These amendments include a small number of derogations from particular provisions in the Bill where they do not align with those Administrations’ policy goals. We have listened to the concerns of the devolved Administrations, and I hope noble Lords will agree that it is sensible to make these changes at an early stage to ensure that we have legislation that works for all contracting authorities in England, Wales and Northern Ireland.

[Lord Wigley (PC)]

I realise it is unusual to intervene on the opening speech, but it may be for the convenience of the Committee to understand the changes with regard to the devolved Administrations. Can the Minister confirm that these have all been agreed with the Welsh Government, in the case of Wales, and, where they relate to Northern Ireland, in Northern Ireland, or are there some here that, because of the time pressure, there has been no opportunity to discuss with the devolved Administrations?

[Lord True (Con)]

My Lords, I will have to be advised on that. I have been advised that they are the result of discussions. If that is not the case, I will set the position clearly and straightly when I come to wind up the debate. I have been led to believe, and know from my own involvement in the matter, that there has been a good deal of agreement between the United Kingdom Government and the Government of Wales. I will certainly confirm that in winding up.

The group also contains a number of technical amendments which are required to ensure that provisions relating to the Bill’s application in the devolved Administrations function properly.

To repeat what I said at Second Reading, I regret that the Scottish Government have opted not to join the Bill. They will retain their own procurement regulations in respect of devolved Scottish authorities. I am sure we would all welcome our Scottish friends if they wished to join the new system proposed by the Bill. Taxpayers and public services alike across the whole United Kingdom would benefit from that. However, at this juncture I am able to lay only those matters requested by the devolved Administrations in Wales and Northern Ireland. I beg to move.

[Lord Fox (LD)]

My Lords, I thank the Minister for his apology at the beginning, which I believe to be sincere and heartfelt. I also thank him, I think, for his introduction of the first of these 50 amendments; it was relatively short, given that they come with little explanation. It is said that there is a productivity crisis in this country—not so in the Cabinet Office amendment-generation department. The Minister can be proud of its performance.

More seriously, I commend the Bill team and the Government Whips’ Office, who have been wrestling with this leviathan of amendments, not least over the weekend. I thank them for their hard work. I will return to the process we are facing after making a few comments on the amendments, particularly around the covered procurement element.

Amendment 1 and several others seek to clarify things by defining covered procurement. I remain confused about where this phrase comes from and why it was necessary. There was no sense from the Minister’s introduction as to why it was necessary to come back after Second Reading with a new phrase. Can he say where this term comes from? Is it employed elsewhere in legislation? I think it is in contract law but it was difficult to find other manifestations of it. I should remind the Minister that, every time a new term like this arrives in legislation, it proliferates a great deal of other legislation because each new word or term will be tested to the limit in the law. If we start bringing in new terms such as this, the Bill will be a lawyers’ enrichment fund—I can see the lawyer opposite nodding in agreement—and that is not a good thing for the country or for government.

In his discussions, the Minister said that many of these new amendments came from consultation that was subsequent to Second Reading. Avoiding the obvious question as to why Her Majesty’s Government did not consult more beforehand, I would like to know which organisations and individuals put forward the need for this change. My guess is that it was not an external force but an internal one, and possibly that the Cabinet Office, having used one lawyer, decided to use a different one who had a whole set of different opinions on the legal nature of the Bill, and that is where the vast majority of these amendments have come from. Far be it from me to say what the benefits are of changing a horse half way across a stream, but we are, I suspect, reaping the consequences. If I am wrong, I am happy for the Minister to tell us so or to publish the consultation that happened subsequent to Second Reading. I will be happy to admit that that was not the truth.

As we noted at Second Reading this is an important Bill, dealing as it does with the technical process for managing a considerable amount of money spent on behalf of the British people by public institutions. We support this process. We noted that it needs to be in the public interest, as well as providing value for money. The objective of this Committee process should be, and should remain, to have a proper debate around how such issues are brought to the fore in this legislation. However, because of the sheer incompetence of the Cabinet Office—a Cabinet Office that, I note, recently published its guide to improving the quality of the legislative process—we are instead pulled into a debate around process.

During Second Reading, there seemed to be a measure of good will. My noble friend Lord Wallace spoke about the need for a co-operative process and the Minister seemed to agree. Subsequently, as the Minister has pointed out, with fewer than four days before the first day in Grand Committee, we were confronted with 350 government amendments. That could have been managed in a co-operative way, but that did not happen. Even if we had to have the amendments, to drop them with no warning so near to the process was an inappropriate way of being co-operative.

Then, at 8.56 am on Sunday, which I remind everybody was yesterday, we all received an updated grouping of amendments. In this, there were 77 changes from the document we had received on Friday—I repeat, 77 changes—with the shape of the groups radically changed. For Members to be presented with so many changes, and then for those changes to keep on moving, right up to the wire, is unacceptable. I stress again that this is not the fault of the Government Whips’ Office, which I suspect was kept at work all weekend thanks to this process and the Minister’s insistence that we plough on with the Bill in the way that was originally planned.

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[Lord Hope of Craighead (CB)]

My Lords, I want to raise a question about the wording of the definition in Amendment 1. I am troubled by the word “covered”. It does not spring off the page as an explanation in itself as to why there is a distinction between procurement pure and simple and this other procurement, described as “covered”. Having looked at the language in paragraphs (a) and (b), I think the obvious word to choose in paragraph (b) is “public” procurement. However, having listened to the analysis of the noble Lord, Lord Lansley, I am doubtful as to whether that distinction is what the definition seeks to describe. But if it is not doing that, and the word “public” would be wrong, is it not possible to find a more obvious word than “covered”?

The choice of language is crucial in a definition clause. It ought to be possible for the reader to take from the definition an immediate explanation as to why there is a distinction between the types of procurement in paragraphs (a) and (b). If it is necessary to go through the hoops that the noble Lord, Lord Lansley, did, I wonder whether it is possible to achieve anything sensible by ordinary language—which is a reason to say it might be better not to have the definition at all. However, if the definition is thought to be necessary, please could a better word than “covered” be found, so that the definition helps us, at the beginning of this complex Bill, to truly understand the distinction between paragraphs (a) and (b)?

[Lord True (Con)]

My Lords, I am grateful to all those who have spoken, although I cannot say it always made for the easiest listening. I have been in opposition, and will be again one day, so I fully understand where those noble Lords who expressed concerns are coming from. I have also been on the Back Benches on my side, and will be again one day, so I fully understand where my colleagues are coming from as well.

It is unsatisfactory that so many amendments have been laid. I apologised for that. It is not, in any of your Lordships’ submission, sufficient. I could tell a few tales out of school, but I am a believer in the old concept that the Minister at the Dispatch Box takes full and personal responsibility for the criticisms that are made. I accept that. The amendments should have been brought forward in a more informative—to use the word from the very impressive speech by the noble Baroness opposite, whom I look forward to working with on the Bill—and timely manner.

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[Lord Purvis of Tweed (LD)]

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

[Lord True (Con)]

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

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

[Lord Hope of Craighead (CB)]

I think the problem may be in the language of paragraph (b), because it does not fulfil what the Minister has been saying is the intention of “covered”. You could keep “covered” but reword paragraph (b) so that it explains more fully what “covered” means, which is what I think the Minister is attempting to do. As it stands, it is very confusing. A confusing definition is a bad way to start a Bill.

[Lord True (Con)]

My Lords, I listened carefully to the noble and learned Lord’s remarks. We will take them away. I have said that I will withdraw the amendment.

My noble friend Lord Lansley was accurate in divining the Government’s intention with this. The intent is to distinguish between the fully regulated—I will not use the word “covered”—and the less regulated.

[Lord Lansley (Con)]

I am sorry to interrupt my noble friend, but I am glad that I was not misdirecting myself.

On the noble and learned Lord’s point, I understood what it meant only when I looked at what “public contract”, as defined by Clause 2, means. Once one looks at Clause 2, it becomes very straightforward to check it. I looked at Clause 1 and realised that it is not a national covered procurement policy statement but a national procurement policy statement. None of the amendments change that bit, which told me that what we are dealing with here is the Government proposing that there should be a mechanism for talking about procurement in its broadest sense, while intending to regulate procurement in a slightly narrower sense by regulating everything above the value threshold. This did not seem intrinsically confusing to me once I understood what it is we are trying to do here.

[Lord True (Con)]

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

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

[Lord Purvis of Tweed (LD)]

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

[Lord True (Con)]

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

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

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

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

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

[Lord Fox (LD)]

I thank the Minister for that. I do not think he answered the question my noble friend asked. Accepting that government Amendment 1 will now be withdrawn, will the government amendments in this group, from Amendment 47 to Amendment 543, be retabled for us to have a proper debate on each of them? As the noble Baroness set out, there are a lot of questions around each of them, none of which have currently been addressed. I am unclear on the mechanism by which those amendments will be retabled. Can the Minister confirm that that will happen so that we can have a proper debate on those amendments?

[Lord True (Con)]

I will have to take procedural advice on that. My understanding is that if I withdraw Amendment 1 it is not the case that the group has been negatived and therefore that the other amendments do not lie on the Order Paper. The Government would obviously have preferred, despite all the justified criticisms—

[The Deputy Chairman of Committees (Lord Geddes) (Con)]

I hate to interrupt the noble Lord in full flow, but a Division has been called in the Chamber.

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[Lord True (Con)]

In order to finish, as I was just about say, we wish to facilitate proper discussion. Obviously, how to proceed is a matter to be discussed in the usual channels. There are matters in the amendments in this group which are technical and one or two raise definitional issues, and so on. We will work on the advice to your Lordships that I promised. In parallel—I cannot speak for usual channels—we will have discussion in the usual channels about how best to proceed in a way that does not lead to a recurrence of this undesirable situation, for which I repeat apologies. There are important, specific and thematic amendments—I like amendments to be thematic. The Government sometimes have good ideas and the Opposition have good ideas—sometimes—and the best way is if all these things are grouped thematically, which is why, when I saw that this health amendment had suddenly crept in, I said, “We should surely do that later.”

We will have usual channels discussions. I hope we can proceed, but we will find which way we can proceed that is best for your Lordships and does not result in a situation such as this. As I said, I shall not come back without explanations that are clear and timely—I cannot remember the phrase I used. We will see what we can do.

With that undertaking and that for usual channels discussions, in the light of the brief earlier discussion with the noble Lord, Lord Wallace, and the noble Baroness, Lady Hayman, I beg leave to withdraw the amendment.

Amendment 1 withdrawn.

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This is very interesting and there is quite a lot to consider, so I am interested to hear the Minister’s response. I guess we all want to understand how the decisions around the utilities part of the Bill were reached.

[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.

[Lord Moylan (Con)]

I think that my noble friend is approaching his peroration. May I ask him for a little clarity? Take the example of the bus company. Bus companies operating under a franchise—for example, those in London—appear to be covered because they have a special and exclusive right. That appears to be what my noble friend is saying; if I am wrong, please correct me. Even though they have bid competitively for that special and exclusive right, and even though it generally lasts only for a number of years—this is to justify the balance of capital investment that might be required for them to allow—then comes back into competitive tender, they appear to be covered.

Bearing in mind that I am sticking with the text of the Bill as circulated, my noble friend says that Schedule 2(17) exempts them. However, that is not what it appears to do. It exempts a contract rather than a contractor, and says:

“A contract for the provision of public passenger transport services”.


In simple terms, is my noble friend saying that, when a bus company procures a building, a new piece of plant, some equipment or even some buses, it is or is not covered by the procurement regulations, even on the assumption that it falls into the special and exclusive category?

[Lord True (Con)]

My noble friend has very characteristically not only picked up an onion but begun to peel it into various levels of the commitment and nature of the activity. I will look into the particular issues in relation to buses referred to by the noble Lord, Lord Berkeley, and my noble friend Lord Moylan.

What I was going to say does not really amount to a peroration. Indeed, at this time, one does not really need a great peroration. What I am here to do is to listen. A range of very interesting and important points have been raised by noble Lords on all sides in relation to the operation of the legislation on private utilities. I will look carefully at Hansard and undertake to have discussions on these matters between now and Report. I am grateful to all noble Lords who have spoken—

[Lord Fox (LD)]

I sense that the Minister is winding. I have a quick question, which I think is best responded to by a letter. It is regarding international agreements and particularly telecoms, which were mentioned. The Australia agreement carves out specifically kit and hardware, but not telecom services, which appear to be left in. Will the Minister write to us about what the carve-out on broadband services is in, for example, the Australia trade deal and other trade deals?

[Lord True (Con)]

Yes, my Lords. I have committed to write in relation to that and I will pick up other questions that have been raised, including by the noble Lord. Obviously, there are existing international agreements that are, if you like, deposited, and which we have to work with, as well as issues of how we move forward case by case, but I will certainly address in a letter the point the noble Lord asks about. It is a legitimate question. The status of international agreements was also raised from the Front Bench opposite, and I will write to the noble Lord on that matter and copy it to colleagues in the Committee.

[Baroness Neville-Rolfe (Con)]

My Lords, this has been a workmanlike discussion, the unpeeling of the onion—the first of many unpeelings of onions, I think. I thank my noble friend Lord Moylan for his support, and the noble Lord, Lord Berkeley, the noble Earl, Lord Lytton, and the noble Lord, Lord Fox—the philosophy of scope is a good phrase. The noble Baroness, Lady Hayman of Ullock, made a strong point about the WTO, which leads me to ask the Minister whether in his follow-up letters he will be able to give us a little more feeling about what is in and what is out for each of the utilities.

I am concerned about that because when we come on to talk about what is covered, it makes a difference—for example, doing special things for small businesses, could we have rules that are not too bureaucratic? Schedules 6 and 7 look quite burdensome through the eyes of a small company. It seems that a lot is covered and then there are executive powers to decide what is taken out and excluded, so the power is with the Minister. I would like to come back to that when we debate the amendment tabled by the noble Lord, Lord Wallace of Saltaire, on delegated powers. It is an important issue.

Can we find a way of not making things too bureaucratic? The noble Baroness, Lady Hayman, made the same point from the other side. Can we improve productivity and growth, which we all desperately want to do in the current circumstances? Can this Bill be a vehicle for that and for improving our international competitiveness? I beg leave to withdraw the amendment.

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At last, now that the process is starting to be sorted out, the Committee can start doing its job, whether that is in the amendment of the noble Baroness, Lady Noakes, or in any other amendment. We seek to scrutinise the detail of the Bill to understand what is going on. The purpose of the Committee is to improve the legislation and make it work, even if sometimes there is an ideological clash about some of it. Everybody wants this Procurement Bill to work because having a better system of purchasing that conforms to the standards we all want is in everybody’s interest. It is in Committee that we can examine the detail in order to do that.

[Lord True (Con)]

Again, my Lords, I am very grateful to all those who have spoken. There have been some interesting speeches. Indeed, I will certainly take the final speech by the noble Lord, Lord Coaker, in which he seemed to deplore the idea that the Government should have any regulatory powers, back to my right honourable friend. We will certainly watch for that as we go forward.

On his more general point in relation to the Delegated Powers Committee and so on, I do take what he said seriously. We will have a debate on that in the next session. I will look into his specific point about secondary and primary legislation. If there is an answer that is an advance on what is already in the public domain, I will certainly have that for the next session when we will look at delegated powers.

I am not really a fan of wide-ranging groups that cover a whole range of different subjects. They seem to have become the habit of our times. When I first had experience of your Lordships’ House, we had quite short debates on relatively narrow subjects, which enabled the Minister and the House generally to concentrate. So I will endeavour to answer all the various points that have been made but some of them may have to come in writing. We will look very carefully at Hansard because there was a very broad range of questions, which started with the questions on universities.

[Lord Fox (LD)]

Can I just point out that the grouping comes from the Government Whips’ Office? We could have extracted all our amendments, one by one, and created a larger number of groups but, probably in deference to the will of the Government, we did not. The future of how many amendments you have in a particular group lies very much in the hands of the Government, not Her Majesty’s loyal Opposition’s or ours.

[Lord True (Con)]

My Lords, they are negotiated in the usual channels. Sometimes it is a fatal thing in your Lordships’ House to express an opinion, in all respect to your Lordships, of how I think things may be done. We are all imperfect—I am sure the usual channels are not perfect—but having a large group does raise challenges in terms of accountability.

I will try to address the various points raised. I apologise if they were so broad that I may miss some of them, for whatever reason. We started on universities with Amendment 3 from my noble friend Lord Lansley. His amendment would exclude universities from a definition of public undertakings within the definition of a contracting authority, and consequently from the scope of the public procurement rules. He asked about public undertakings and public authorities. Public undertakings are relevant only in the context of the utilities that we were discussing. The universities will be public authorities if they meet the public authorities test, and not caught if they do not meet it.

Universities are included in the UK’s coverage commitments under the World Trade Organization’s Agreement on Government Procurement as contracting authorities that are subject to the rules, where they are publicly funded. The existing definition of a contracting authority in the Public Contracts Regulations 2015 contains tests of the extent to which a body is publicly funded or publicly controlled. These tests are then applied by the body in question to determine whether they are caught by the definition. The definition of a contracting authority in the Bill is intended to capture the same bodies. Universities are therefore in scope of the procurement rules, but only to the extent that they are mainly publicly funded or controlled. The position is likely to vary depending on universities’ funding streams, and those that derive the majority of their revenue from commercial activities would likely be out of scope.

Amendment 4 in the name of my noble friend Lady Noakes would adjust the definition of a contracting authority in such a way that bodies would be brought into scope where they are subject to control by a board if more than half the members are “capable of being” appointed by a contracting authority. I think there was some interest in that proposition on both sides of the Committee. Our initial feeling is that it would mean a more prescriptive and potentially wider scope than the proposed definition, which brings into scope only bodies controlled by a board that has been

“appointed by a … contracting authority.”

Again, the definition of contracting authority in the Bill is intended to capture the same bodies as in the existing Public Contracts Regulations. We are not seeking to change the scope of bodies covered in any way, though some adjustments have been necessary to replace references to European concepts such as bodies governed by public law with the more relevant UK analogous concept of bodies undertaking public functions. Ensuring consistency is necessary not only for practical continuity purposes but in respect of the United Kingdom’s international market access commitments in free trade agreements, which use the existing definition as the basis of the UK’s coverage offer.

The current definition brings into scope bodies that have a board more than half of whose members are appointed

“by the State, regional or local authorities, or by other bodies governed by public law”.

The definition in the Bill is consistent with this by bringing in bodies that are subject to the management or control of

“a board more than half … of which are appointed by a … contracting authority.”

The existing definition in the Public Contracts Regulations does not contain any reference, as per the proposed amendment, to the notion of board members “capable of being” appointed by a particular contracting authority. Whether or not an authority chooses to exercise its right to appoint members to a board is not addressed, and was not intended to be addressed, within the definition. For that reason, we do not currently consider that it would be appropriate to adjust the definition in the way the amendment suggests.

However, I have listened carefully to what my noble friend has suggested. We will consider further whether it is possible to exercise control without making appointments by the threat of control. For the moment I ask my noble friend not to move the amendment, which we cannot support as it stands.

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[Lord True (Con)]

I was actually coming on to the rest of that but, with respect, the noble Lord asked me a specific question about government communications in his utterance; therefore I was responding to it.

Going further, in line with the existing exemption under the current regime, as provided for in the GPA, partner nations will typically agree to the rules for the award of contracts in a joint project by one or more of the partners in an international agreement. We cannot expect our international contracting partners, each with different national procurement procedures in some cases, to follow the specific procedural rules in this Bill. The ability to switch off the procedural rules in the legislation where there is a clash with what was agreed with the parties to the international agreement is essential to facilitate arrangements; however, I will clarify that further for the noble Lord. Again, I ask that this amendment be withdrawn.

I turn to Amendment 42, which relates to local authorities. I apologise for the length of my speech but a number of different themes came out here. Given my life and my having been involved in setting up joint arrangements with other authorities, I understand where the noble Lord, Lord Wallace, is coming from in seeking to add to and amend Clause 10 to make it explicit that a group of local authorities forming a consortium may constitute a centralised procurement authority. As an old local government hand, I do not particularly like that phrase; on the other hand, earlier, I cited the Yorkshire procurement arrangements as the type of thing that would be permitted and would be a centralised procurement authority.

[Lord Wallace of Saltaire (LD)]

My Lords, I suggest looking at the definitions in Clause 112. I note that the terms “central government authority”, which clearly does not apply, and “centralised procurement authority” occur together. I suggest that, in introducing an amendment on Report, the Government may care to consider something that replaces “centralised” with “combined”? That would not have the implication of being run from Whitehall and would express much more explicitly what is intended.

[Lord True (Con)]

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

[Lord Purvis of Tweed (LD)]

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

[Lord True (Con)]

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

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

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

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

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

[Baroness McIntosh of Pickering (Con)]

I was delighted that the noble Lord, Lord Coaker, was able to pursue some of things that I touched on. What concerns me most, particularly given what my noble friend the Minister said about the earlier amendments in this group, is that I am at a loss to understand why we need this Bill if so much of it is already set out in the GPA or in existing law. Can my noble friend explain the role of the thresholds, particularly in the provision of food to public authorities?

[Lord True (Con)]

My Lords, we need the Bill because we need a national procurement structure. I hear what my noble friend says but there has been agreement across the Front Benches and from the Liberal Democrats that we need to establish a framework that will last. People may have different views on whether it diverges enough or not at all from the arrangements we have—doubtless that will be explored—but we need to have such a framework and a body.

Clause 2, which is probed, classifies three types of contracts that are public contracts. The first category covers contracts for the supply of goods, services and works, provided that they are not subject to an exemption. I was asked about how each of those exemptions was arrived at. I cannot answer on all of them here but I can certainly provide information to the noble Lord. The second category covers frameworks—that is, contracts providing for the future award of other contracts. The third is concession contracts, which we will discuss.

I turn to the concerns around what Schedule 2 is about. It sets out the types of contracts where the contracting authority does not need to apply the rules for the contract award procedure; they are exempted from the procurement rules. The Bill needs to ensure that contracting authorities have the freedom to carry out the most appropriate procurement where the rules in the Bill might otherwise be unsuitable, for example where it is necessary to protect national security interests and the procurement is too sensitive to advertise; where the contract award procedures are governed by other legislation, as in rail services, which are currently awarded under a separate regime operated by the Department for Transport; or where it is necessary to protect the Government’s ability to make public policy interventions, such as on broadcasting content.

Procurement Bill [HL]

Lord True Excerpts

Committee stage
Wednesday 6th July 2022 Grand Committee

Moved by

[Lord True]

10: Schedule 2, page 76, line 8, after “could” insert “reasonably”

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

My Lords, before I begin, I would like to make a brief personal statement. Do not get too excited; it is not what you might think—

[Noble Lords]

Oh!

[Lord True (Con)]

In answer to an interesting question in the Chamber yesterday, I implied that my noble friend Lady Wheatcroft had not been present in Committee. I had not noticed that she was here and I personally apologised to her afterwards. But, as my remark lies in Hansard, I thought it appropriate to correct the record. My noble friend Lady Wheatcroft graciously said that she did not expect me to do this, but I think that it is the proper thing to do.

In moving Amendment 10, I will speak to this group of government amendments. Monday was difficult and, on behalf of the Government, I candidly acknowledged the contrition and sympathy that we felt about the number of amendments that were put down. I think that we have arrived at a better place. As noble Lords know, we arranged a briefing for noble Lords on today’s amendments and I am grateful to the officials who gave this at short notice. I hope that noble Lords who were not able to be there have had the chance to consider the supplementary information on the government amendments that was circulated. Officials will be available again tomorrow to provide a technical briefing for your Lordships on the remaining government amendments.

The government amendments in this group refer only to Schedule 2, which lists what is an “exempted contract”. The exemptions are not mutually exclusive and a contract can be an exempted contract if it falls under multiple paragraphs of this schedule. If a contract is exempted, its award and management will not be subject to any of the legislation, unless it is an international organisation procurement, where some obligations apply.

Amendment 10 to Schedule 2 would ensure consistency with similar drafting elsewhere in the Bill. For any of the exemptions in this schedule to apply, the subject of a contract must represent the main purpose and cannot reasonably be supplied under a separate contract. The amendment would add “reasonably” to this description and is consistent with drafting elsewhere in the Bill—for example, on mixed procurements, the duty to consider lots and estimating the value of a contract.

Amendment 11 clarifies the exemptions for vertical arrangements, which arise where a contracting authority enters into an arrangement with an organisation that is connected vertically with it—in other words, with an entity under its control, or what is called a “controlled person” in the legislation. A typical example might be a trading company set up by a local authority to fulfil a specific task, such as carrying out waste treatment and collection for the authority. We briefly discussed this on our first day, when I said that the Government would bring forward further facilitating amendments; I know that the Liberal Democrat Front Bench expressed an interest in that.

Amendment 12 deals with a consequential update to clause formatting following Amendment 11. These amendments to the definition of vertical arrangements have been tabled following some helpful feedback from stakeholders, including the Local Government Association, of which I believe I still may be a vice-president, in which case I should declare an interest. The feedback showed that the drafting did not properly provide for the fact that such arrangements may involve control by more than just one contracting authority. The government amendments therefore ensure that this exemption will continue to apply where there is joint control of the controlled person, as it does now.

Amendment 13 has two parts. The first part—the inclusion of new sub-paragraph (5)—is a result of the amendment to provide for joint control. It ensures that joint control may still be achieved where one person is representing multiple contracting authorities on the board—or similar body—of the controlled body. This continues the existing position in Regulation 12(6) of the Public Contracts Regulations 2015. The second part—the inclusion of new sub-paragraph (6)—stems from the updated definition of “contracting authority”, which means that the vertical arrangements exemption would unintentionally have allowed a wider category of organisations to access the exemptions than intended. This amendment ensures that the vertical and horizontal arrangements are available only to the intended public sector contracting authorities and not to public undertakings and private utilities, which have arrangements that reflect their more commercial nature.

Amendment 14 is a mirror of Amendment 13, for the same reasons. In this case, the purpose is to limit the availability of the horizontal arrangement exemptions to the intended public sector contracting authority recipients.

Amendments 15 and 16 remove the term “legal activity”, which is currently defined by reference to the Legal Services Act 2007, and replaces it with the term “legal services”. This is necessary because the definition in the 2007 Act is not appropriately applicable in a Scots law context. Leaving the term undefined allows the exemption flexibility to adapt to different legal systems within the confines of the remainder of the exemption.

I turn now to the final government amendment in this group. Amendment 17 adds a reference to legislation that explains the meanings of “contract of employment” and “worker’s contract” in Northern Ireland. This is a result of the talks with the Northern Ireland authorities. Adding the Northern Ireland reference again allows the exemption flexibility to adapt to different legal systems, provided that the remainder of the exemption is met. I beg to move.

[Baroness Noakes (Con)]

My Lords, I shall speak to Amendment 11A, which is an amendment to government Amendment 11. Amendment 11A is really only a place- holder to discuss some broader concepts about this Bill and about paragraph 2 of Schedule 2 in particular.

I confess that I paid little attention to the government amendments ahead of our first day in Committee. Like other noble Lords, I was completely overwhelmed by the huge groupings and the lack of explanation that arrived before they were tabled—hence, I tabled Amendment 11A only yesterday. I am certainly grateful for the explainer that was circulated yesterday. I have not yet read all 60 pages, but a reasonable summary is something like this: “We are trying to keep the new UK procurement code as close as possible to EU rules.”

This is at the heart of one of my main problems with this Bill: we have not created a UK code at all. The Bill may well have simplified or reduced the number of different sets of rules, but that has not achieved a significant simplification of the rules to any meaningful degree. Furthermore, it uses terms and concepts that are comprehensible only to procurement practitioners and in a way that is often alien to the way in which we do things in other areas. It has few principles and a whole load of pernickety rules, of which this schedule is one. In short, this is the EU way of doing things and not the UK way of doing things. I believe that we have missed an opportunity to create something that would have worked better for UK businesses and, indeed, for the UK public authorities that have to comply with it.

I turn to the specifics of Amendment 11A. The amendment would delete new sub-paragraph (2A) in Schedule 2, which is contained in my noble friend’s Amendment 11. Sub-paragraph (2A) is not new, as it rewrites sub-paragraph (2)(c) of the existing Bill. The effect of sub-paragraph (2A) denies the vertical arrangements exemption that my noble friend has just described if the body concerned has even one share held by other than a public authority. I think that this is nonsense. Holding one share or any other kind of minority holding does not change the nature of control, which is what paragraph 2 purports to base the vertical exemption on. It would restrict the exemption to bodies that are wholly owned by the public sector, in effect, and I can see no economic rationale for that.

I also want to challenge two other aspects of paragraph 2, arising out of new sub-paragraph (2B), which is a rewrite of the existing sub-paragraph (2)(b). There is one material change from the existing sub-paragraph (2)(b). It is similar to the issue that I raised in the context of Amendment 4, which we debated on our first day in Committee. The existing sub-paragraph (2)(b) refers to a person who

“exerts, or can exert, a decisive influence”.

The new version merely talks about a person who “exerts a decisive influence”. I explained on Monday that the conventional UK approach when looking at things such as control is to use a test based on the capacity to control rather than actual control. Curiously, paragraph 2 uses that concept of capacity to control because it uses the basic definition of control via the parent undertaking definition in Section 1162 of the Companies Act 2006. Under that section, control exists if a parent undertaking holds a majority of voting rights or has the right to appoint or remove a majority of the board. That is, control exists for the basic purpose of this clause if there is the ability to control, whether or not the right is used. Can my noble friend explain why the Government are using one approach to control but another for decisive influence, deliberately caused by the amendment that he has just moved?

I now turn to the concept of decisive influence itself. If someone other than a controlling authority exercises decisive influence, the vertical arrangement exemption does not apply, so it is important to find out what it means. I expected to find a definition of the term “decisive influence” in the Bill, because it is not a term that is found in general use related to companies or the control of organisations, but I cannot find a definition.

Interestingly—I say “interestingly” as I find it interesting, but I am a bit of an anorak on these things—Section 1162 of the Companies Act contains the concept of dominant influence, which is an alternative way of establishing whether a parent undertaking exists. A dominant interest is defined in Schedule 7 to that Act and requires a right to give directions to a board of directors that the board of directors has to comply with. The Companies Act does not use “decisive influence”; it uses “dominant interest”.

How then do we establish whether decisive influence exits? Do we assume that because the Bill does not use the Section 1162 definition it means something different? That might imply that it is something below the level of control, but precisely what it is getting at seems unclear. As far as I can tell, decisive influence is not a term used in English law, which comes back to my point that we are still rooting ourselves in EU law. It is found in EU competition law and, in that context, it is used as part of a rebuttable presumption of control, so that if a majority of shares are held the parent undertaking is assumed to exercise decisive influence on the subsidiary undertaking.

If it means a variant of control, we end up saying that vertical arrangements will not be exempt even if a contracting authority can control a body. If another body in fact controls that body, it does not matter if the other body can control it but does not do so; it just looks at whether it exercises control. However, the exemption is denied if a tiny fraction of the shareholding of the undertaking is held outside the public sector. There is another leg, which is if less than 80% of the activity is carried out for the contracting authority. There is a confusing set of thresholds for denying the exemption. It is even more complicated if joint control is involved, but I will not go into that. I submit that logic and common sense have somehow gone missing in paragraph 2 and that it needs a rethink.

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[Lord Purvis of Tweed (LD)]

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

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

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

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

[Lord True (Con)]

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

[Lord Purvis of Tweed (LD)]

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

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

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

--- Later in debate ---

[Baroness McIntosh of Pickering (Con)]

I would like my noble friend to respond to a point that was raised by the noble Lord, Lord Purvis, on Monday, which is pertinent to the remarks from the noble Lord, Lord Coaker, just now. I am confused about whether paragraph 19 of Schedule 2 relates to military contracts only. I think that was the issue raised by the noble Lord, Lord Purvis, on Monday, and I do not know that we got a satisfactory answer. I am very confused about whether paragraphs 19 and 20 of Schedule 2 should be read together with paragraph 26. I think I am right that, on Monday, the noble Lord, Lord Purvis, raised whether the international agreements under paragraphs 19 and 20 relate to defence contracts only or whether they are more general.

[Lord True (Con)]

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

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

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

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

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

[Lord Purvis of Tweed (LD)]

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

--- Later in debate ---

[Lord True (Con)]

I am sorry, I thought that I heard the noble Lord referring to the Australia trade agreement. It was my understanding that that would be coming later. I was not sure, given that certain things are cropping up in different places. I assure the noble Lord that the matter of the Delegated Powers Committee and the Schedule 2 recommendations will be discussed in group 2, to follow. I was not sure whether we were going to get the Australia agreement later, since the noble Lord had referred to it, so I thought that I had better get the answer in.

[Baroness McIntosh of Pickering (Con)]

I understand that Parcelforce is a trading name of Royal Mail, but is it a commercial or a public enterprise under the definition that my noble friend has just given?

[Lord True (Con)]

My Lords, I have given the answer that I have been advised to give at this stage. In answer to the further supplementary question that my noble friend has asked, I will ask officials to clarify what I said. I was advised to inform the Committee that it does not mean that entities such as Royal Mail that operate a private postal service are covered. If that needs further clarification, I am sure that we can provide it.

These joint bodies are extraordinarily important. Noble Lords have spoken, particularly of local authorities, with great experience, which I hugely respect. I am second to none in believing that Governments of all colours do not generally do enough to listen to the wisdom of local government. I have said that on the Back Benches and on the Front Bench and under Labour, coalition and Conservative Governments. In answer to the noble Lord, Lord Coaker, this Government are certainly keen to ensure that local authorities will be able to operate as they did before, which was one of the reasons why this amendment was tabled, as he divined. I pay tribute to the Local Government Association for its consistent engagement. The Bill maintains the position in the current procurement regime, albeit adjusted for the purpose of UK law, by using the terminology of bodies that undertake public functions, which is drawn from the test of average functions of a public nature derived from the Human Rights Act 1998 —a complicated but well-established test, I understand.

I was asked by my noble friend Lady Noakes about decisive influence and dominant influence. I have to be very careful speaking personally as a Minister from the Dispatch Box, but our position is that we believe that the amendments we have tabled are clear and sufficient. However, on my noble friend’s question, the reference to the Companies Act 2006 is used to describe the nature of relationships between those entities that can engage in the exemption. The reference to decisive influence is broad in affecting the decision-making of the contracting authority. I will take away my noble friend’s point and consider it further, because interest was displayed by other Members in the Committee.

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[Lord Coaker (Lab)]

I am sorry to do this, but may I pick up on the point the Minister was making to the noble Lord, Lord Moylan, about the letter he will write? The answer to the question that the noble Lord, Lord Moylan, posed is quite significant. It would be interesting for the whole Committee to know whether Regulation 12 of the Public Contracts Regulations 2015 applies in a way that would allow the noble Lord’s example organisation to continue as it is now, when the Procurement Bill becomes an Act. I apologise for intervening a bit late.

[Lord True (Con)]

Yes, indeed. I totally take that point. It is good practice, and I hope it will be our practice in this Committee, to circulate to all noble Lords who take part. I was not proposing to send a billet-doux to just the noble Lord, Lord Purvis of Tweed, or my noble friend Lord Moylan and not spread it round. I will address that, but I repeat that it is our expectation and hope that local authorities will be able to do as they did before. That is the fundamental point and I will pursue this in that spirit. In that light, I hope the noble Baroness will be prepared to not move her amendment.

Amendment 10 agreed.

Moved by

[Lord True]

11: Schedule 2, page 76, line 11, leave out sub-paragraphs (1) and (2) and insert—
“(1) A contract between a contracting authority and a person that is controlled by—(a) the contracting authority,(b) the contracting authority acting jointly with one or more other contracting authorities,(c) another contracting authority, where that authority also controls the contracting authority referred to in paragraph (a), or(d) another contracting authority acting jointly with one or more other contracting authorities, where the authorities acting jointly also control the contracting authority referred to in paragraph (a).(2) A contracting authority, or a contracting authority acting jointly with one or more other contracting authorities, controls a person if—(a) the contracting authority is a parent undertaking, or the contracting authorities are parent undertakings, in relation to the person,(b) no person other than the authority, or authorities, exerts a decisive influence on the activities of the person (either directly or indirectly),(c) more than 80 per cent of the activities carried out by the person are carried out for or on behalf of—(i) the contracting authority or authorities, or (ii) another person that is, or other persons that are, controlled by the authority or the authorities acting jointly, and(d) in the case of joint control—(i) each of the contracting authorities is represented on the person’s board, or equivalent decision-making body, and(ii) the person does not carry out any activities that are contrary to the interests of one or more of the contracting authorities.(2A) A person is not to be regarded as controlled by a contracting authority, or a contracting authority acting jointly with other contracting authorities, if any person that is not a public authority holds shares in the person.(2B) In sub-paragraph (2)(a)—“parent undertaking” has the meaning given in section 1162 of the Companies Act 2006, save that an “undertaking” includes any person;“parent undertakings” means two or more contracting authorities acting jointly that would, if they were a single undertaking, be a parent undertaking.”

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Moved by

[Lord True]

12: Schedule 2, page 76, line 33, leave out “(2)(d)” and insert “(2)(c)”

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[Baroness Hayman of Ullock (Lab)]

My Lords, I thank the noble Lord, Lord Wallace of Saltaire, for tabling these amendments in the first place, and I thank those Members who put their names to them. It is important that we have had the opportunity to debate the report produced by the Delegated Powers and Regulatory Reform Committee, a report that the noble Lord, Lord Blencathra, described as a scorcher. I think we all agree that there is a lot in here of great concern, and it is very important that we have spent this time going through it. I also thank members of the committee for the work they did in going into such detail on this very complex Bill, to draw our attention to their serious concerns and the problems that we need to look at and resolve.

I will not go into a great amount of detail. Other noble Lords have talked about the detail of the report so there is no point in my repeating that. I will just draw the Committee’s attention to a few things. My noble friend Lord Berkeley started the debate by expressing his concerns about the broad range of powers—the Henry VIII powers, as they are described—and other noble Lords have talked about their concerns about them. The noble Baroness, Lady Neville-Rolfe, felt that some of them were potentially dangerous. If noble Lords’ concerns are that strong, it is really important that we look at how to address them. She drew attention to a number of particularly damning paragraphs. There was also talk about the fact that a large number of clauses should be subject to the affirmative procedure rather than the negative one, and of course we absolutely support that.

I draw the Grand Committee’s attention to paragraph 60 of the report, which was the one that struck me in the context of the way that a lot of Bills, legislation and policy development have been happening recently. If noble Lords will bear with me, I will read it out. Talking about Clause 109, it says:

“This is, in effect, a skeleton clause as the real operation of the exemption process is to be left to regulations. We are very concerned that the Government appears to have chosen this approach for no other reason than that it hasn’t yet developed the underlying policy.”


That gives me great concern because it seems almost to be becoming the norm, and it is not the right way to go about making regulations and legislation. The DPRRC then talks about its Democracy Denied? report, which the noble Lord, Lord Blencathra, mentioned, and says that

“we drew attention to the issue of the inclusion of powers in bills which were, in effect, ‘a tool to cover imperfect policy development’. We said this was unacceptable and that we looked to the Government to undertake the systemic reforms necessary to prevent its happening. It is disappointing to find evidence in this Bill that this issue has not been addressed.”

That was the only further concern that I wanted to draw the Committee’s attention to today. A number of us have worked on a lot of Bills now, and there is a worrying lean towards this lack of policy development before Bills are drawn together and published. That is often why the Bills then come into so many difficulties. It would be better if all this was sorted out much earlier, so that we all knew where we were and could understand and better support the Government in producing good legislation. Some very interesting questions have been asked, including a very specific one from the noble and learned Lord, Lord Hope of Craighead, and I look forward to the Minister’s response.

[Lord True (Con)]

My Lords, I thank all those who have spoken. I take seriously the gravity of the remarks made. I assure my noble friend Lord Blencathra, whose chairmanship of the committee was distinguished—he can speak even more freely now that he is no longer in that role—that while I did not catch the names of all the individuals that he asked me to refer his remarks to, I will make sure that that is done as he requested.

On the question raised by the noble and learned Lord, Lord Hope of Craighead, it is a matter of regret —we discussed this on the first day—but the Scottish Government have declined to be part of this legislation. They do not wish to be. They wish to pursue their own course and obviously that is why they are omitted from the definition of an appropriate authority under the legislation. It would be odd if they were an appropriate authority to alter legislation which they declined to take part in. That is the explanation.

[Lord Hope of Craighead (CB)]

Of course, it is possible that the Administration in Scotland will change. This Bill will become an Act which will perhaps last longer than the present regime in Scotland. Assuming one has an Administration who are favourable to participating in this system, the question then is why they should not be included, or at least mentioned, in the definition of appropriate authority. It is quite a serious issue, because appropriate authorities is referred to in many places in the Bill, as the noble Lord knows. If, as I think the noble Lord is indicating, this is simply a sort of penalty for not participating in the legislation, it seems unfortunate that that should be set in an Act which will last for, I imagine, many years into the future. Is it not worth rethinking this? Might it not be better to mention the Scottish Ministers and leave it to the future to see whether they actually exercise the power that has been given?

[Lord True (Con)]

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

[Lord Purvis of Tweed (LD)]

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

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

[Lord True (Con)]

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

[Lord Purvis of Tweed (LD)]

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

[Lord True (Con)]

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

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

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

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

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

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[Lord Fox (LD)]

I appreciate the comment the Minister has just made. This is a straight question: under what circumstances would these thresholds be changing, other than the GPA change? This would either be with or without inflation—inflation has nothing to do with it; the GPA has so far determined what these thresholds are. I am a little confused about what power the Government were seeking in the first place with this.

[Lord True (Con)]

I believe that there may be potential, for example, for an evolution in the nature of the regime. However, I will come back to the noble Lord with further examples, if that is helpful. We can add that to the list of matters to take up.

Finally, the noble Baroness, Lady Hayman of Ullock, quite understandably expressed concerns about Clause 109. This is specifically related to private utilities; it provides a power for an appropriate authority to reduce the regulation of private utilities under the Bill to reduce regulation. As the Bill provides at Clauses 81 and 89, contracting authorities owe a duty to treaty state suppliers to comply with a substantial part of the Bill. The power can be exercised to make amendments only where those amendments do not put the UK in breach of its obligations to those suppliers, and this will inherently limit the scope of the amendments we are able to make. For example, private utilities will still be required to publish tender notices and contract award notices.

Private utilities are covered by the Bill where they have been granted a special or exclusive right to carry out a utility activity, where that right substantially limits other entities that have no such rights carrying out those activities. The clause requires the appropriate authority to consult persons representing the views of private utilities and other appropriate persons prior to making regulations. The Government, quite rightly, would have to seek the approval of Parliament under the affirmative procedure for any deregulation measures.

While those are the explanations, I have tried to give the Committee a detailed explanation on each of the amendments of the Government’s position and view. I return to the fundamental point I set out at the outset: we are giving, as I have indicated as we have been going along, proper consideration to the recommendations of the Delegated Powers and Regulatory Reform Committee. We intend to return to this on Report, in cognisance and consideration of what noble Lords on all sides have said.

[Baroness Neville-Rolfe (Con)]

I want to express a concern. Although the Minister’s argument seems to be that the powers are already rather limited and that there are natural limitations—for example, the GPA—I am not convinced that we actually need to put all this into delegated legislation. In some places, we could decide things and make it clear in the Bill. Then, if there is future evolution of the market or the development of technical regimes, as my noble friend suggests, we should come back to the House and look again at legislation in those areas.

Obviously, I come from a business background, and, as I said, the thought that officials can effectively make major changes that will affect the market in which you are operating is actually quite worrying. We had an example of this on Monday. The example we received from the noble Baroness, Lady Hayman of Ullock, about

“a tool to cover imperfect policy development”

was a quote from the report in relation to private utilities. Therefore, I did not repeat it, but it is a good example of where there might be a changing market, which might then generate quite substantial uncertainty in the procurement field and be a big problem for our companies.

I took four egregious examples out of a respected cross-party report to try to be constructive, but my noble friend has unfortunately tried to explain why the Bill is as it is, rather than to respond to these individual examples. I really need his response to these examples because I need to know how much to press on things such as notices and concessions when we get to those parts of the Bill. If it is clear that the delegated powers cannot be misused, it makes it a lot easier to agree to other parts of the Bill. I apologise to the Committee for speaking at length, but I feel very strongly about this.

[Lord True (Con)]

My Lords, it is Committee and my noble friend and all other noble Lords are entitled to intervene as much as they wish. She makes an important point, and I was just on that paragraph in my speech—it is slightly small compared to the rest of the speech—and was trying to set out the Government’s rationale for why the balance is probably right.

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[Lord Berkeley (Lab)]

I take the noble Lord back to his response on Amendment 18 in relation to public passenger transport services. He argued, probably rightly, that they are the responsibility of the Department for Transport and should therefore be exempt here. Paragraph 17 of Schedule 2 defines a “contract”, and paragraphs 33, 34 and 35 at the end of the schedule cover “Concession contracts”, which are all exempt. I assume—perhaps the Minister could confirm this—that the exemptions for “air services” and “a qualifying air carrier” come under the definition of “concession”, because the Bill says this, although it does not define what a concession is.

I am concerned that there are examples in this country of a third category: a franchise. I am not sure where that comes into this; I know of one air service that is a PSO and probably a franchise, and, certainly, some bus and train contracts are franchises. If the Minister does not have the answer to that today—it is a little detailed—perhaps he could write to us, because it is quite important. If the Bill is going to exempt all these things, the whole lot needs to be exempted and handed to the Department for Transport. It is no good having concessions exempted and franchises not. I look forward to the Minister’s comments.

[Lord True (Con)]

My Lords, I will have to take counsel and advice on that, and I will certainly come back. As I said, the fundamental position is to try to keep things as they are, exempting passenger transport services that are currently exempt and covered by the Department for Transport. Concession contracts are dealt with slightly differently under the regime—we will discuss that later—but I will come back to the Committee to clarify the points that the noble Lord asked about.

[Lord Wallace of Saltaire (LD)]

I thank the noble Lord for his explanations; if some of them had been available earlier, it might have been easier to accept some of the Government’s arguments. I find Clause 109 the most difficult: it gives the Minister the power to amend primary legislation without any reference to Parliament. But I note that he said that this will be looked at and perhaps discussed with others between Committee and Report, and I thank him for that constructive approach.

In turn, I am sure that he noted the strong views around the Committee about this particular Bill and the broader issues with skeleton Bills. We will return to this in a number of other areas in the Bill where we want to see spelled out things that we are at the moment expected to take for granted that the Minister will later say something about, provide a strategic policy statement on or whatever. That is simply not enough, so this will be a continuing issue.

In passing, as we keep stubbing our toes against the GPA, I am quite surprised that Jacob Rees-Mogg has not demanded that Britain withdraws from the GPA, because if we are to take back control we had better take it back properly of some of these international obligations, which clearly limit and constrain what we can do in a range of quite often important issues, but perhaps that is an over-partisan remark in Committee on a Bill. We will have to return to this, but I thank the Minister for the constructive way in which he has responded. I beg leave to withdraw the amendment.

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[Lord Coaker (Lab)]

Is it, my Lords? I am that excited and I have been speaking that long—is it still Wednesday?

[Lord True (Con)]

My Lords, if that is an offer to come back tomorrow and carry on, I do not know how popular that will be.

There are many things that I like about the noble Lord opposite. First, he is very likeable and fun to be with. Secondly, he has a long connection with the great city of Nottingham, which he will know is something that I share. Thirdly, there is what Mr Baldwin would call his awful frankness. However, there is something of a philosophical divide that will come through in this discussion. I will reply in detail to the amendments, but what we have heard from the noble Lord is that the Labour Government that he envisages would want to use the powers under this Bill to constrain individual private companies that sought to provide public services to conform to the will of whatever the Labour Party’s wishes in power might be.

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[Lord Wallace of Saltaire (LD)]

Flexibility, I think I understand, means a skeleton Bill. I think we all understand that. It will either be in the strategic policy statement, which we will come to, or it needs to be in the Bill. I think that around the Committee, everyone will feel that more ought to be in the Bill than is there now, so that we all know where we are going. If we are not allowed to have a draft of the strategic policy statement before the Bill finishes its passage, that is really not adequate.

[Lord True (Con)]

My Lords, I think the noble Lord makes a slightly different point. It is a point of concern, and we discussed it on the earlier group. I understand that how much is in secondary legislation and so on is a concern to noble Lords. When I talk about flexibility, I am talking about a structure that is simple and clear, and does not say, “Before you apply to procurement, you have to do a, b, c, d, e, f, g, h…”. We could probably use up the whole alphabet with the aspirations that we will hear in this Committee before anyone can get past the starting gate that we are discussing now. One needs to bear in mind the need for that sort of flexibility. That is the relative simplicity I am thinking about. However, time is late and I need to respond, not to the debate launched by the noble Lord opposite, but to the amendments.

My noble friend Lady Noakes came forward with a very thoughtful amendment, as always. There has been an outstanding debate, and I will want to study it in Hansard and reflect on everybody’s contributions. My noble friend had a very specific point in relation to estimation of cost and how services should be aggregated. Her probing amendment seeks to establish where the Government are coming from.

The proposed methodology in the Bill for estimating the value of contracts, which allows some flexibility, is very similar to the long-standing valuation rules in existing regulations and will therefore be helpful to procurers. Paragraph 4 of Schedule 3 contains an “anti-avoidance” provision that is designed to ensure that contracting authorities do not artificially subdivide procurements in order to evade the rules. This mirrors an analogous concept in the long-standing regulatory scheme but we think that it is presented in a simpler and more user-friendly way. It involves a general rule that contracting authorities should, where possible, seek to aggregate for the purposes of valuation but, as my noble friend said, it also permits exceptions where there are good reasons. Without the “good reasons” exception, the provision becomes something of a blunt instrument.

My noble friend asked for some examples so I will give one: an authority buying its printers from a particular supplier does not necessarily mean that it should buy all its toner, paper and servicing from the same supplier if it believes that it can get a better deal elsewhere. We believe that contracting authorities need to continue to have discretion not to aggregate where they have good reasons not to do so. I will look carefully at my noble friend’s point about the overall estimation of costs but we do not believe that it would be desirable to set out in legislation what constitutes a good reason because this will depend on the circumstances of each case. I request that this amendment be withdrawn.

Amendment 81, tabled by the noble Lord, Lord Wallace, seeks to add elements from the Government’s Sourcing Playbook as a new clause before Clause 14 to require contracting authorities to conduct a “delivery model assessment” when introducing “significant change” in their business model, helping to inform strategic decisions on insourcing and outsourcing. I agree with the noble Lord that rigorous assessment of contracting authorities’ plans is essential for good delivery. However, again, we have continuously sought throughout the development of the Bill to ensure that it remains flexible and does not unnecessarily stipulate blanket requirements, which tie contracting authorities down to a single process that adds unnecessary burdens or will not necessarily work in all cases. For example, “make or buy” decisions, which the noble Lord asked about, need to be considered carefully—indeed, our commercial guidance in playbooks includes comprehensive guidance on this—but, in our submission, it is not necessary for this to be mandated in legislation. Furthermore, large outsourcing contracts will obviously be scrutinised by departmental, Cabinet Office and Treasury controls to ensure value for money and successful delivery.

So we believe that these things should not be mandated by legislation and that this is already achieved through the development and implementation of the sourcing playbooks, which the noble Lord kindly drew our attention to and actually complimented very much with his desire to put them into primary legislation. I am grateful for his endorsement of those principles.

I turn to Amendment 82, tabled by the noble Lords, Lord Hunt of Kings Heath and Lord Aberdare. Some of the underlying arguments on this clause obviously touched on extremely important issues. The amendment proposes to amend Clause 14 to create a presumption that contracting authorities should publish a “planned procurement notice” unless there is good reason not to. Again, I agree that it is vital that the market—particularly certain aspects of it to which the noble Lord and others referred—is given sufficiently early warning of what contracting authorities intend to buy so that suppliers can gear up to deliver. This is particularly important for SMEs and charities, which were referred to by the noble Lord and others.

The Bill makes additional provision to this effect in Part 8. Contracting authorities with an annual procurement spend of more than £100 million will already be required to publish a “pipeline notice”, which will contain information about upcoming procurement with an estimated value of more than £2 million that the contracting authority plans to undertake in the reporting period. This will allow suppliers to see higher-value upcoming procurements and make a decision on whether they wish to bid.

However, contracting authorities should be left to determine where planned procurement notices are useful for lower-value contracts, owing to the potential burden. I will come back to charities. Contracting authorities are incentivised to make use of these notices through a reduction in the tendering period in circumstances in which they are properly issued. They will not necessarily be useful in all circumstances; as such, the Government are currently not of the view that it would be helpful to mandate their use, but I will reflect on what the noble Lord said.

Amendment 84, tabled and interestingly spoken to by my noble friend Lord Lansley, seeks to add to the purposes of “preliminary market engagement” in Clause 15(1). This includes,

“ascertaining how the tender notice may be expressed in terms of outcomes and”

KPIs

“for the purpose of minimising … processes”.

Focusing on the outcomes of the contract, as opposed to being too prescriptive on how these are achieved, is indeed a sensible reason for conducting preliminary engagement—I agree with my noble friend on that. Contracting authorities are encouraged to consider KPIs in their preliminary market engagement. For example, Clause 15(1)(c) includes

“preparing the tender notice and associated tender documents”.

I will look at the Bill against what my noble friend has said, but, as I have said, in some respects the Bill already provides for this and encourages the purpose that he has asked for in terms of Clause 15(1)(c) giving the purpose of preparing the tender notice and documents.

Amendments 85 and 87, tabled by the noble Baroness, Lady Worthington, and others, are important. They provide that, when undertaking “preliminary market engagement”, contracting authorities may engage with suppliers in relation to designing a procurement process that will maximise certain public goods and encourage innovation. I very much hear what noble Lords across the Committee have said about innovation, and I will certainly take that thought away. I think there would be a lot of understanding and support in government for that aspiration; innovative new entrant suppliers should be actively sought out.

We wish to promote and encourage contracting authorities to conduct preliminary market engagement. However, this engagement needs to be appropriate and related to the subsequent procurement. Imposing such an obligation on contracting authorities could have the counterproductive effect of disincentivising preliminary market engagement which, I am sure we all agree, would not be desirable.

[Baroness Worthington (CB)]

Just to clarify, Amendment 85 would not make a mandatory requirement; it simply places it under the “may” condition of Clause 15. Therefore, it does not materially change Clause 15 but just explicitly states that we are seeking this process to draw out innovation.

[Lord True (Con)]

I take the noble Baroness’s point and understand what she is saying. This takes me back to the opening remarks. We have doubts about the appropriateness of including wider policy objectives, such as those suggested in the noble Baroness’s amendment, in this piece of primary legislation. Each procurement is different, and what is appropriate, for example, for a large-scale infrastructure project, may not be appropriate for a smaller, price-driven transactional arrangement. The strategic priorities that a Government require contracting authorities to have regard to when carrying out their procurement functions are, therefore, better detailed in the national procurement policy statement—which we will debate later in Committee—than in primary legislation.

Amendment 88, tabled by my noble friend Lord Lansley, seeks to require contracting authorities to take into

“account … the size or experience of”

suppliers when determining whether the supplier’s involvement in preliminary market engagement has placed them at an unfair advantage and, therefore, whether they should be excluded from any subsequent procurement. Like other noble Lords who have spoken, my noble friend put forward a thought-provoking point. As I said earlier, I agree with the importance of building capacity among SMEs. We have seen an increase in spending on SMEs in recent years. Figures published last month show that government spending with small businesses rose to a record £19.3 billion in 2020-21—the highest since records began. We hope that the new procurement regime will make it simpler, quicker and cheaper for suppliers, including SMEs, charities and social enterprises, to bid for public sector contracts, and with lower barriers to entry to the market.

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[Lord Hunt of Kings Heath (Lab)]

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

[Lord True (Con)]

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

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

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

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

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

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

[Baroness Noakes (Con)]

My Lords, the only amendment that is going to be withdrawn is my rather small amendment in this group, Amendment 22. My noble friend said that we needed flexibility, and that good reasons were there to allow flexibility. I completely buy the need for flexibility in the procurement rules, but I still wonder whether good reasons without some other constraint around them are sufficient. I was pondering whether the good reasons need to be attached to value for money, or something similar. That may be covered by the interaction with Clause 11, which sets up procurement objectives, but I am probably too tired to work that out in my own mind at the moment. I will consider it further, and my noble friend the Minister, who also said he would consider it further, might like to reflect outside this Committee on how that works out. For this evening, I am sure that everyone will be mightily relieved if I beg leave to withdraw my amendment.

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Moved by

[Lord True]

24: Clause 5, page 3, line 41, after “works” insert “wholly or”

Procurement Bill [HL]

Lord True Excerpts

Committee stage
Monday 11th July 2022 Grand Committee

[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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[Lord Wallace of Saltaire (LD)]

My Lords, although I am not a great expert on this subject, it seems that this is a case in which judicial review would be extremely easy because the question of how one justifies it is not spelled out here. Could the Minister perhaps write to us between now and Report about what criteria would then be used to justify the decisions taken? I entirely agree with the noble Baroness, Lady Neville-Rolfe, that one wants to ensure as far as possible that we do not leave large holes for judicial review to come in.

[Lord True (Con)]

My Lords, obviously I accept that, but we will certainly undertake to provide further information.

The noble Lord, Lord Scriven, was adumbrating cases where it should be possible to take different issues into account in terms of local activity. I understand the point that noble Lords are making about clarity. Clarity can either be sought through superdefinition, chasing the Snark through the end of the rainbow—sorry, I am mixing my metaphors—or it can be something for which the Government set out a clear framework that ultimately it is open to anyone in a free society to test under the common law. There is a balance to be found here and we will write further.

On Amendment 57, the noble Lords, Lord Wallace and Lord Fox, and the noble Baroness, Lady Bennett, complain that Clause 11 does not define value for money in order to leave a degree of flexibility for different types of organisation with different drivers to place a different emphasis on the concept. That is not unusual in legislation. Value for money as a concept is not uncommon on the statute book without further definition. It has been used in relation to setting high-level objectives for organisations, including the general duties of Ofcom in Section 3 of the Communications Act 2003 and indeed those of the Nuclear Decommissioning Authority in Section 4 of the Energy Act.

There are many precedents, I am told, but I have only given two of them where the term is left undefined, and this allows a degree of flexibility. We are happy with the broad interpretation of value for money, but Amendment 58 would have the effect of limiting the scope for future reviews of what value for money means. That is something that future Governments might wish to do. We do not support that position at the moment but, again, I am ready to listen to further discussion in Committee.

Amendments 128 and 130, tabled by the noble Lord, Lord Davies of Brixton, amend the provisions on award criteria. I am grateful to the noble Lord, first for the explanatory statement which sets out that his amendment intends to ensure that value for money does not override other procurement objectives, and secondly for his exposition of it. While it is important to be clear that Clause 22 does not affect the relative weighting of the objectives in Clause 11, I am grateful to the noble Lord for his consideration of this point and respond on that basis.

Public procurement needs to be focused on achieving value for money, and we submit that this is rightly at the top of the list of objectives set out in Clause 11. The noble Lord laid an amendment, the second part of which would in effect—taken literally—relegate or at least abnegate the possibility of placing value for money exclusively at the top. Our submission is that, while value for money will be the highest priority in procurement for the Government and that is reflected in the drafting of the Bill, it does not disapply or override the obligation on contracting authorities to have due regard to the other matters in Clause 11. I have no doubt that this will be probed further, but I hope that this will reassure the noble Lord that the amendment is not only unnecessary but, in its detail, we could not accept it. There is a balance to be sought here, and that balance will be seen differently by successive Administrations in successive places.

There was a very interesting range of amendments put forward in this group. I have listened carefully, and we will engage further on the points raised. I hope on that basis that noble Lords will feel ready to withdraw or not move their amendments.

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I was interested in the comments by the noble Lord, Lord True, last week. He essentially said that my noble friend was making a dangerous attempt by the Labour Party to constrain private companies that sought to provide—

[Lord True (Con)]

That is what the noble Lord said.

[Lord Hunt of Kings Heath (Lab)]

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

[Lord True (Con)]

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

[Lord Hunt of Kings Heath (Lab)]

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

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

Procurement Bill [HL]

Lord True Excerpts

Committee stage
Wednesday 13th July 2022 Grand Committee

[Baroness Hayman of Ullock (Lab)]

Oh, the noble Baroness is there; I was looking for her in the place in which she sat on Monday. She moved, just to confuse me. This is the trouble with picking things up later.

The noble Baroness rightly said that meeting net zero is a government-stated objective and we believe, as she does, that this should also be an objective within the Procurement Bill. It could make a genuine difference, should that be something that needs to be taken account of. We also support those noble Lords who said in the debate that this helps to meet the levelling-up agenda as well as achieving net zero.

We know that social value is included in the NPPS—the national procurement policy statement—so I ask the Minister: if it is in the policy statement, why is it not referenced in the Bill? It concerns me that the policy statement can be changed at any point, so not having it in the Bill and just having it in the statement means that it is not absolutely embedded within the legislation. I will briefly mention that, between 2012 and 2020, there was no statutory guidance on social value. This inhibits its development, so we need to ensure that this does not happen in future.

I express strong support for Amendments 49 and 58 in the name of the noble Baroness, Lady Worthington, which are about climate and environmental matters and the importance of having these based within the Bill. She also said that “public benefit” needs further clarity, so I must ask again: does “public benefit” include environmental outcomes? It would be helpful to have further information on this. The noble Baroness, Lady Parminter, spoke importantly about the fact that using procurement in this way is an opportunity to drive behaviour change, because we are not going to achieve the Government’s net-zero objectives without behaviour change.

Amendment 45 in the name of the noble Lord, Lord Wallace of Saltaire, specifies a number of overarching requirements that a contracting authority must take due regard of when carrying out procurement. We support the main points that he made—particularly, as well as the carbon account, the ethical and human rights record of the supplier, as he said. I know that we will talk about this in a later debate, but that is important.

Amendment 53 in the name of the noble Lord, Lord Lansley, which the noble Baroness, Lady Noakes, introduced, again talked about defining “public benefit”. I think that the Minister can see that this is not party political: right across the Committee there is concern about what “public benefit” means and what it is going to deliver as part of the Procurement Bill. The noble Lords, Lord Wallace of Saltaire and Lord Purvis, also tabled amendments on this issue.

I finish by briefly mentioning an interesting briefing that I had from UKCloud. I do not know if other noble Lords have received it, but it is about the importance of maximising social value through procurement in the world that UKCloud works in—the cloud providers—and how doing so would be consistent with wider net-zero policy aspirations. UKCloud feels that it is important to support businesses in this country that are providing those kinds of platforms and support and that the sector can lead in the provision of clean, green technologies, which can help to digitise and decarbonise users of its services. It also believes that, if the sector got that kind of support from government, UK businesses would have the opportunity to really innovate and become leaders in this field. I found that an interesting briefing. If the Minister has not seen it, I would be happy to share it with him, because it had some interesting thoughts in it. The briefing also said that UKCloud feels that weighting should be given to make sure that cloud providers for the UK Government are paying their taxes in full on all earned income in the UK—that is an important point—and that they should have a clear and measurable track record of investing in local jobs and skills. The briefing has some interesting points about how procurement could help its particular type of business. I finish there and I look forward to the Minister’s response.

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

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

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

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

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

[Lord Hunt of Kings Heath (Lab)]

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

[Lord True (Con)]

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

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

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

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

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[Baroness Thornton (Lab)]

Can the Minister please explain why the term social value is not in the Bill?

[Lord True (Con)]

My Lords, as I have just said, we believe that the additional objective of maximising social value would be a duplicate, as it is embraced in “public benefit”.

[Baroness Thornton (Lab)]

I am sorry, but the Minister has said that there is no definition of public benefit, and that is quite right. However, there is a legal definition of social value. It exists and is on the statute book, so why are the Government not using “social value” in the Bill?

[Lord True (Con)]

My Lords, again, I have set out the argument. The noble Baroness disagrees but I am not going to repeat a third time the reason why we think maximising social value is unnecessary and would be a duplicative addition. Each procurement is different and what is appropriate, for example, for a large-scale infrastructure project is not for smaller transactional procurements.

Furthermore, procurement policy should be aligned with wider government policy and, as such, the publication of a national procurement policy statement is based on the strategic policy priorities relevant at the time. It would not be appropriate, in our submission, to include in the Bill priorities which can and probably will change —we have heard that they will—based on an Administration’s objectives. It is always important that policy priorities are included in individual procurements only where they are relevant to the subject of the contract.

On Monday, for example, noble Lords on all sides gave those of us on the Front Bench, I freely confess, a hard time in discussing the importance of minimising bureaucracy to facilitate SME participation in procurement. I took that away as a powerful call, which I have said we will discuss. As I think I have already indicated outside the Chamber, the Government are keen to meet and consider these points.

The paradox is that seeking to include extraneous requirements, which this and other amendments in the group risk, could make it harder for small businesses to bid for public contracts. One cannot talk the small business game, which noble Lords did strongly and fairly, while adding compliance requirements that make things harder for small businesses and help larger organisations to corner the market.

We think that Amendments 48 and 52 in the names of the noble Lords, Lord Hunt and Lord Coaker, and the noble Baroness, Lady Hayman, are unnecessary and potentially unhelpful to contracting authorities in attempting to impose on them an obligation to have regard to improving the economic, social, environmental and cultural well-being of the relevant area in and throughout all their procurement activities. In particular, they would place unnecessary burdens on them in relation to areas where this is of limited relevance and, again, open them up unnecessarily to the risk of legal challenge.

I wonder whether we would all agree—in fact, I do not have to wonder; I know that we would not all agree—on what carrying out procurement in a “socially responsible way” means. In a sense, that is implicit in the challenge from the noble Baroness opposite. We all might have rather different understandings of what that requires. Imposing a legal obligation of such potential breadth on contracting authorities is, we submit, exposing contracting authorities to unnecessary risk and complexity. Contracting authorities will be able to take account of measures that improve the economic, social and environmental well-being of the relevant area—this may differ from local authority to local authority, for example—where it is relevant to the subject matter of the contract. The Bill already allows this, which is absolutely in line with the Government’s levelling-up agenda.

On Amendments 53 and 58 in the names of my noble friend Lord Lansley and the noble Baroness, Lady Worthington, as I said in our debate on an earlier group, the term “public benefit” is deliberately undefined; consequently, it is intended to be a flexible concept that gives contracting authorities a degree of discretion. Again, local authorities may have different views from place to place on what the most urgent benefit in their area is. Although all the proposed economic, environmental and social additions, including creating new businesses, jobs and skills, and reducing geographic disparities in the United Kingdom, might be facets of public benefit in different circumstances—I do not challenge that—we do not believe that it would be helpful to elaborate them in the Bill.

It might also be unfair to small contracting authorities to impose an obligation to consider the reduction of geographic disparities in the United Kingdom; they might be more concerned about disparities up the road. Doing so risks excluding other matters that might be more valid in specific circumstances. The Government consider that contracting authorities are better placed to make that decision in the individual circumstances at hand. We want contracting authorities to think about the extent to which public money spent on their specific contracts can deliver greater benefit than it otherwise would. I think that there is agreement in the Committee on that point. As I have said, each procurement is different; for example, what is appropriate in delivering a giant infrastructure project is not appropriate for smaller procurements.

I turn to Amendments 59 and 59A from the noble Lord, Lord Wallace—

[Lord Wallace of Saltaire (LD)]

My Lords, I have listened carefully to what the Minister said but I am still puzzled. We are trying to craft a Bill that will have quite a long shelf life over a period when we may have a change of Government or some change in government. The Minister is saying that the catch-all public benefit is the only thing that we should have in the Bill in terms of principles and objectives. I would have thought that the consensus across all our democratic parties on public benefit and social value is a little wider than that and that it would help to provide guidance if that were spelled out rather more in the Bill. Otherwise, the principles and objectives will simply swing from one side to the other when different Governments come.

Everything cannot be left to each changing Minister to define. Surely the concept of public benefit is one that we share, as is the concept of social value. We also share the view that £300 billion-worth of public procurement sets a culture, the core of which I hope that all Conservatives, Labour, Liberal Democrats and Greens share, because that is what we are attempting to get. The Minister is saying that we cannot agree on that. I am aware of some people—the Chicago school of economists and those who follow them—who deny the concept of public benefit altogether and believe that private benefit is the only thing that drives the economy, prosperity and society. I hope that we are not there and are not starting from there.

[Lord True (Con)]

The noble Lord always slightly loses me when he rides off in his speeches. I have a vision of him lying awake, trying to get to sleep, thinking of these terrible right-wing Conservatives whom he always cites and seeing the worst in everything. I thought that the great tradition of the Liberal party and liberal values, which I was brought up with and adhere to, is to give space to variety and not uniformity; there should be flexibility, with opportunities for local judgments and for contracting authorities to make them. The concept of public benefit is wide and flexible and should be so to give contracting authorities a degree of discretion to consider whether their specific contracts can deliver greater benefits than they otherwise would.

For example, contracting authorities are already able to make it clear in their technical specifications that fair trade options can be included in the products provided to meet the requirements of the contracts, provided that they do not discriminate against other products of other suppliers. The noble Lord objected to the mention of the terrible word “money”, but public procurement needs to have a focus on achieving value for money. The two things are not contradistinctions.

While I would expect contracting authorities to consider these matters where appropriate, it would not be helpful to elaborate them in the Bill, for the reasons that the Government have submitted, as they would not apply to all contracts. The course that the other side is proposing will lead to a uniformity imposed on a diversity, which is the antithesis of local values. I respectfully request that these amendments be withdrawn.

[Baroness Hayman of Ullock (Lab)]

Just before the Minister sits down, I really do not think that that is what we are trying to achieve. It is just to try to bring in a definition of something. If you have an objective laid out, without proper understanding of what the phrase is trying to achieve or what it means, it could be quite confusing. All we are trying to get is some clarity on what is meant by “public benefit” and what the Government are trying to achieve by having it as an objective. I have no problem with there being flexibility around this—that is important in procurement—but, as the noble Lord, Lord Wallace, said, we need some sort of guidance. If the Government do not want to put a definition in the Bill, some guidance underpinning it, on what this is looking at and what the Government are trying to achieve, would be extremely helpful.

[Lord True (Con)]

My Lords, in a sense, it depends where the straitjacket applies and where flexibility is enabled. We will come on shortly to debate the national procurement policy strategy and I gleefully anticipate that that will be another zone of contention in our Committee, to which many of your Lordships will want to add more and more things. The noble Lord, Lord Coaker, was enthusiastic about the national procurement strategy at the opening of our proceedings and it is something that an incoming Government would be able to change and mould. Maximising public benefit is an important objective of the Bill.

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[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.

[Lord Wallace of Saltaire (LD)]

I beg leave to withdraw the amendment.

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I believe that the Minister himself thinks that much of this is important; no one is for the degradation of the environment. We are all trying to say to the Government that they need to go further to ensure that the agreed procurement strategy will achieve the effect that the Government want. The Government have a net-zero by 2050 policy, so the procurement policy is an essential way for the Government to deliver their own policy. Why would it be controversial for the procurement policy statement to require businesses, contractors and contracting authorities to adhere to that policy, thereby enabling the Government to achieve their own objective? That is the question many of us want answered: why is it not mandatory? Why is it not subject to an affirmative process so that all the other amendments before us become relevant for inclusion in what would be a progressive statement that would excite and inspire people and help the Government deliver something that we all want them to achieve?

[Lord True (Con)]

I agree with the noble Lord, Lord Coaker. This has been an extremely interesting and thought-provoking debate, and I thank noble Lords for it.

There have been various strands in this debate, one of which is the last one alluded to by the noble Lord. There appears to be a suspicion in some minds about whether this lies in the may/must thing and whether there will be a national procurement policy statement. We have published a draft statement, which I will come back to later in my speech. I will not read any of it out, because the noble Lord, Lord Hunt of Kings Heath, was kind enough to read out some of it—although I do not think that he quoted this specific bit—about

“contributing to the UK Government’s legally-binding target to reduce greenhouse gas emissions to net zero by 2050”.

I know that noble Lords are saying, “Oh well, yes, but, et cetera”—

[Lord Davies of Brixton (Lab)]

The Minister referred to that document as a “draft statement”. My understanding is that it is a non-statutory document, which is something slightly different. Is it a draft of what we are going to get later this year?

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[Lord True (Con)]

This document was produced at one stage of the process of working towards this procurement legislation to illustrate what the national policy statement might look like. I will come on to the question of consultation because that was a second theme and ask in the debate. It was clear in the speech by the noble Baroness, Lady Parminter, about how Parliament will be involved in the process and the hope that Parliament will be able to influence the process in an effective way. I have heard that call and will reflect on it.

The third strand takes us back to where we were before. Noble Lords are seeking to put in primary legislation constraints on what a procurement strategy might and should contain. Having been taken to task by the noble Lord, Lord Scriven, in the debate on the previous group about being diffident about amendments that say “must have regard to”, all the amendments in this group, bar those that are applying the thing, are “must” amendments. They are a tighter straitjacket on the potential procurement statement than what we had before in terms of what is proposed to go into primary legislation, so I am instinctively less likely to be attracted to them.

For the reasons that we have debated at length—that there is a difference between insight and knowledge, that some people want to tie a lot down in primary legislation and that the Government are arguing for flexibility—we sadly cannot accept any of the amendments in this group. Amendment 60, tabled by my noble friend Lord Lansley—the may/must amendment—would require the Government to publish a national policy procurement strategy. We have shown, in earnest, what we might move towards, and we have drafted Clause 12.

However, any procurement policy should be aligned with wider government objectives and, as such, the publication of an NPPS is a decision based on the strategic policy priorities relevant to the Government at that time. Our feeling is that we should not seek to bind a future Government—that may be of a very different complexion to ours—to publish a specific document. Therefore, we think that changing the drafting of Clause 12 from “may” to “must” and mandating the statement in this manner would not be appropriate. However, I have listened carefully to what has been said, and it goes into the box of satisfying Parliament that it will have an opportunity to have influence because we are a parliamentary democracy, and Parliament should have influence. That is a fundamental faith that I hope is shared by all of us who have the honour of being Members of Parliament.

The noble Lord, Lord Davies, raised a point about statutory versus non-statutory. I believe that I said—but somebody behind me said that perhaps I did not—that it was not necessarily statutory but the paving, if you like, was included in statute. The current NPPS is non-statutory. If I gave the opposite impression, that was not my intention, but obviously we are talking about the future here. It is there to show what a statutory NPPS might look like in the eyes of the Government. I hope that I have clarified that.

Similarly, Amendment 546, tabled by the noble Baronesses, Lady Worthington, Lady Young and Lady Parminter, and my noble friend Lady Verma, provides for Clause 12 to be brought into force immediately upon the Act being passed. Again, this amendment seeks to ensure that, in one sense, the things that people want to happen will happen quickly. I hear strongly what my noble friend says about small businesses and the need to reach out and help innovators and the creatives and, on the other hand, to get an NPPS before the public and into operation.

As my noble friend Lady Verma and others will know, it is currently envisaged that there should be a period of six months after the Act is passed before it comes into force, which will allow for consideration and discussion, and for training and learning about implementation. In that light, there are certain difficulties in the proposal to bring the NPPS in on the very first day. I can assure her that the contracting authorities will be required to have regard to the NPPS and embed it in their own organisations. If it is mandated to be on the day the Act is passed, the process may not work as we currently envisage it, but I have heard what has been said in the Committee about the concerns people have on the process and will take that away to colleagues. At the passing of the Act—the point mandated in this amendment—the new regime would be yet to be fully implemented, and we are allowing this period for familiarisation.

The other strand in the debate, as I have alluded to, goes back to our previous group on setting specified strategic priorities in primary legislation. The range of topics we have heard has been very wide—the Government profoundly agree on many of them—and some were very detailed. I know of the passion of the noble Baroness, Lady Boycott, on food matters and am frankly horrified to hear that Coca-Cola is paying for its product. You would have to pay me to have a tin of Coca-Cola, I can tell you. However, the set of details in the proposal could potentially be quite onerous, and the noble Baroness’s objectives are secured or sought in other legislation and activities. I will come back to this later in my remarks.

The range of amendments in this group shows that there are many different priorities. It is precisely for that reason that we believe the contracting authorities should have a range of flexibility and that some of these matters are potentially better detailed in the NPPS than in primary legislation. But I understand why, through these amendments, noble Lords are trying to express their concern on the matters that they wish to have put in. For example, Amendments 61, 65, 69, 70, 70A and 79, in the names of a number of noble Lords, refer to the climate change proposals and net zero. As I have said, these are in the current non-statutory document. While I recognise the importance of this, it is absolutely correct in our view that public procurement needs to be focused on achieving value for money.

The noble Lord, Lord Hunt, read out parts of the current draft and said that there is a dichotomy and a balance here. Yes, we admit that there is a dichotomy and a balance to be reached but we maintain that it would not be appropriate to include wider policy objectives in primary legislation. Each procurement is different and, as I have said before, what is appropriate for a large one is not necessarily appropriate for a small one. It is always important that policy priorities are included in individual procurements only where they are relevant to the subject of the contract, in our submission. That is to avoid making procurements unduly complex and difficult, particularly for smaller or new entrants and innovators, to comply with.

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[Lord Wallace of Saltaire (LD)]

I have just one more question. It is about periodicity. From the point of view of a contractor, it would be unwelcome to have too frequent changes in the public policy statement or too long periods in which the statement is not revisited. If I were a contractor, I would want to know when a new statement might be coming.

We have a relatively strong convention that strategic reviews of foreign policy and defence take place every two to four years or at the beginning of each Parliament. Would the Minister consider whether there needs to be something in the Bill to prevent new Ministers, when they come into their department, nine months after their predecessor took office, having their statement instead, which would be quite chaotic; or a Minister who had been there for seven years deciding that he did not want to have anything to do with it? Some encouragement for a regular period of ministerial statements might be a positive aspect for the Bill.

[Lord True (Con)]

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

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

I turn to Amendment—

[Lord Hunt of Kings Heath (Lab)]

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

[Lord Davies of Brixton (Lab)]

On a serious note, I add the example of pension schemes. The Government have laid a series of responsibilities on pension schemes to have regard to matters such as climate targets. The Government have accepted the principle of doing it this way and the Minister seems to be ignoring that.

[Lord True (Con)]

In the real world, we are dealing with a Bill which relates to contracting authorities. The counterparties to contracting authorities are would-be suppliers. The more one lays a duty on contracting authorities to do something, the more a small business which is seeking to enter the procurement process will have to come forward with pages and pages of compliance documents. Noble Lords may think that is not the case. On a personal note, my wife, who is far greater than me, runs a small business. When she started, the compliance requirements were about an inch thick, but now they are much thicker. The danger is always that, in the desire to do good, one ends up creating barriers to entry.

[Baroness Bennett of Manor Castle (GP)]

Is it not the case that small and medium-sized enterprises are facing these requirements from other quarters? I am thinking of a meeting I attended of the northern Country Land and Business Association where we heard from the banking sector that no farmer would be able to apply for a loan unless they could show their carbon budget. We have talked about food, as one area. This is going to be the reality of doing business. These will be pre-existing things, so this would simply ensure they are taken into account.

[Lord True (Con)]

I hear that but I must say this: it is sometimes quite extraordinary to listen to noble Lords. You would not think that it was this Government who amended the Climate Change Act 2008 in 2019 to introduce the target of a reduction of at least 100% in the net UK carbon account by 2050. The other parties had every chance to do that but did absolutely nothing. I am then lectured in this way about the Government not putting in the small print of this particular piece of legislation a target for which, to be fair, this Government legislated and, frankly, this Prime Minister pushed strongly. Procurement Policy Note 06/21 already sets out how to take account of suppliers’ net-zero carbon reduction plans in the procurement of major government contracts. Included as a selection criterion is a requirement for bidding suppliers to provide a carbon reduction confirming their commitment to achieving net zero in the UK by 2050. It is there in that procurement policy note.

Amendment 71 tabled by the noble Lord, Lord Aberdare, would require contracting authorities to have regard to the NPPS in respect of contracts awarded from the framework and/or a dynamic market on every occasion. The NPPS applies to both the setting up of a dynamic market and the awarding of a framework agreement. Contracting authorities will therefore need to apply it when establishing conditions of membership that suppliers need to satisfy in order to participate in a dynamic market; when undertaking a competitive tendering procedure to award a framework; and in setting the contract terms and conditions that apply to the framework. We believe that this is sufficient for the purposes of ensuring that the policy priorities are fully reflected in government contracts, but I will look carefully at the noble Lord’s remarks.

[Lord Aberdare (CB)]

I thank the Minister for that answer and for getting to it at the third time of asking, by which point I was almost bursting with excitement as to what he was going to say. I am not entirely clear why the Bill seems to take frameworks and dynamic markets out altogether but I will study what the Minister has said and endeavour to understand. I thank him for getting there in the end.

[Lord True (Con)]

Well, I did try to get there but I had an intervention, then another intervention. It would be discourteous not to respond to—or be provoked by, as some may feel—the odd intervention. Is that not the give and take of debate, which is what our blessed Parliament is all about? If I have given the noble Lord incorrect advice, I will correct it, but what I have read out is the legal advice that I have been given.

Amendment 78A tabled by the noble Lord, Lord Wigley, provides that a Minister of the Crown may not introduce a Bill in either House of Parliament to amend or omit Clause 13, which relates to the Wales procurement policy statement, unless, as the noble Lord explained, Senedd Cymru has resolved by a majority of those present in voting to approve it. This is an uncongenial part for the noble Lord: the effect of this amendment would be to fetter the power of this and any future Parliament. The Government therefore cannot accept this amendment. However, as I mentioned earlier—he was kind enough to allude to this—we respect the devolution settlement and the competence of Wales on this matter. I have placed that and the degree of co-operation we have with the Welsh Government on the record in Hansard. That due respect for the devolution settlement is something that the Government aspire to see continue in this case, but we cannot accept the lock that he requests in the amendment.

[Lord Wigley (PC)]

I am grateful for and accept the integrity with which the Minister is putting that forward and the spirit in which he stated the difficulty that there would be with my amendment. None the less, he will be well aware that there are other forms of amendments that could be put forward, possibly on Report, to ensure that there is the necessary consultation and discussion before any changes in legislation take place. That form of words has appeared in other legislation. Could I invite him to consider that between now and Report? I think that that would be a good indication for those in Cardiff.

[Lord True (Con)]

My Lords, obviously my right honourable friend will consider everything in his engagement with the Welsh Government. If the noble Lord wishes to bring forward an amendment, I will also consider and respond to it. By the way, I was not waving at my officials or my absolutely brilliant colleague; one of those wretched moths was just about to fly into my ear and prevent me hearing the noble Lord’s charming and persuasive words.

Further amendments cover compliance, reporting requirements and review. I know that this is an area that the Committee is interested in and will probe as the Bill goes forward. Amendment 75, tabled by the noble Lord, Lord Wallace, provides for a compliance review within three years, with a particular focus on small businesses and social enterprises. I fully understand the importance of social enterprise. The noble Lord is not in his place any more but I myself created social enterprises when I was the leader of a local authority; I think that their contribution to our national life is immense.

I assure noble Lords that the Government are committed to breaking down barriers for small businesses and new entrants in supply chains. We had a good debate on that on Monday; my noble friend, among others, made very strong points. Our position is that, although we agree that compliance in this respect is important, it would not be appropriate to legislate and place additional burdens on contracting authorities for this. Small businesses and other suppliers will continue to have access to the Public Procurement Review Service, which will form part of the procurement review unit, to raise any concerns that they have in respect of contracting authorities’ compliance with the Bill, including the duty to have regard to the NPPS. The Bill also provides the Minister with the power to investigate these cases. I am sure that this will provide small businesses with good recourse to challenge non-compliance with the NPPS but we have undertaken to give further consideration to and engagement on the interests of that group in relation to small businesses; I will add the noble Lord’s suggestion to that engagement.

Finally, we return to the question of social value, which was addressed in the previous group. Amendment 75A would require the Secretary of State to provide guidance to contracting authorities on how to implement social value in line with the NPPS. Again, the noble Lord, Lord Hunt, was kind enough to read out the current draft document, where social value is fully represented. As I argued in the debate on the previous group, we believe that this amendment is not necessary. The Government and the Government for Wales will publish procurement policy statements containing their priorities, which all contracting authorities must have regard to when carrying out a procurement or exercising functions related to it. As these priorities may change from one NPPS to another, we do not believe that it would be appropriate to specify on the face of the Bill that guidance on a given issue must always be produced.

Amendment 80, tabled by the noble Baronesses, Lady Hayman of Ullock and Lady Bennett, and the noble Lord, Lord Coaker, concerns the inclusion of a new clause for requiring carbon reduction plans from suppliers for contracts above £5 million. I have already referred to a procurement note but, as I have mentioned, we do not see this type of criterion being suitable for inclusion in the Bill. While central government has policies for this on complex procurements, the amendment would be a burdensome addition to the workloads of contracting authorities across the UK and could potentially inhibit new entrants.

[Lord Coaker (Lab)]

Excuse me for interrupting the Minister but I do not understand what he just said. Amendment 80 would make mandatory what the Government have already said procurement is required to do. Procurement Policy Note 06/21, which the Government have published on their website, is titled:

“Taking account of Carbon Reduction Plans in the procurement of major government contracts”.


All the amendment does is clarify the legal status of 06/21, which is the Government’s own policy. Given the line the Minister has taken, I would be parading 06/21 as a good example of what the Government are doing. That is all this amendment seeks to change in the Procurement Bill. The Minister may need a note on this—I appreciate that—but that was the purpose of this amendment. I wonder whether the Minister could clarify what he has just said in reference to Procurement Policy Note 06/21, which we have included in the explanatory statement as the purpose of Amendment 80.

[Lord True (Con)]

I deliberately referred to Procurement Policy Note 06/21. It is something that the Government have done; however, the line I am taking and the position of the Government is that we do not wish to encrust the Bill with statutory requirements. I am glad that the noble Lord opposite follows the policy—I reminded him of it as I was going through my speech—but, if I yield one, I will yield 125. It was kind of the noble Lord to say that he was pleased that the Government published Procurement Policy Note 06/21 but I wish he would be satisfied.

I recognise that Amendment 80 replicates the £5-million threshold but we think that taking this policy forward would potentially be a burdensome addition for SMEs, which are required to produce and maintain such documents—not only if they are small SMEs but if they want to be part of a consortium for a larger government procurement project. Despite what the noble Lord said, I do not believe that this changes the overall position of the Government that we should not add to the Bill, to primary legislation, the encrustations that he requests.

[Lord Coaker (Lab)]

I am sorry to pursue this. Procurement Policy Note 06/21 helpfully has some frequently asked questions at the end. One asks when it should be applied. It says that the note

“applies to all Central Government Departments”.

What does that mean? Does it apply or not? Is the Minister saying that it applies to them but the Government do not really mean it and departments can choose whether to do it? What is its status? Is it worth the Government putting in their own documents that it

“applies to all Central Government Departments”?

They might as well just say, “Do it if you want”. What is the purpose of publishing it if it is very loose and can apply only if the departments want? I do not know.

[Lord True (Con)]

That is the point. Currently, 06/21 refers to “Central Government”, as the noble Lord said, but his amendment applies to “all contracting authorities”, as I read it. If that is not the case, I will stand corrected and we will write a letter to explain that it applies to everybody, as he proposes. I am advised that his amendment goes further than the current procurement arrangements but, if that is incorrect, I will write a note.

[Lord Coaker (Lab)]

I thank the Minister for that. It is helpful. If I get a letter back saying that the amendment goes further than 06/21, with that information, I can change the amendment before Report or be satisfied and not need to. It would be very helpful of the Minister to clarify that in a letter; I wonder whether he might think of sharing that with other Members of the Committee.

[Lord True (Con)]

Yes, I hope that letters that are sent out are shared with other Members of the Committee and, if not, I will make sure that they are. I would not want to encourage the noble Lord too much in the hope, because the Government’s position is that we do not think it is advantageous to encrust the primary legislation with the range of aspirations that we have heard from many sides in this Committee. The noble Lord can have another try, but I cannot promise that it will be different. But I will write to him and circulate the letter anyway.

I respectfully request that these amendments be withdrawn or not moved.

[Baroness Noakes (Con)]

My Lords, we have had a very wide-ranging, and rather long, debate on this group of amendments. I will start with my noble friend Lord Lansley’s Amendment 61, on the list of strategic priorities. As I predicted, the Minister heard various lists of different kinds of things that noble Lords wanted in the Bill. Let me say that I was wholly convinced by my noble friend’s explanation of why they should be encrusted—as he put it—in the Bill, but I suspect that I am not representative of the Committee in that regard.

In respect of Amendments 63 and 64, my noble friend helpfully said that the Government would share the draft of a national policy statement as part of the consultation process, which I think clarifies that aspect.

I turn to the lead amendment in this group, Amendment 60—the may/must amendment. My noble friend the Minister argued for flexibility for the longer term; other Governments may not want to issue such statements, and I completely accept that. What I did not hear from my noble friend was that this Government commit to publishing a statement under this clause. I would have hoped that, at least from the Dispatch Box, the Minister would commit to publishing the statement, having included Clause 12 in the Bill. He talked about the timetable for the introduction of the Bill and the six months of learning process, but I did not hear what happens to the policy statement. I hope that he might reflect and perhaps give clarity on that in writing or at a later stage.

With that, I beg leave to withdraw.

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Moved by

[Lord True]

83: Clause 15, page 11, line 9, leave out “specifications” and insert “requirements”

[Lord True (Con)]

My Lords, the Government have the lead amendment in this group, and I look forward to hearing the comments of fellow members of the Committee. Although there is a large number of government amendments in this group, most of them are consequential, so there are actually seven points in the government amendments, which I will express as briefly as I can.

Amendment 83 to Clause 15 is a consequence of Amendment 93. It clarifies in Clause 18 that the authority’s requirements and award criteria are two separate concepts. The amendments make it clear that, to be awarded a contract, the supplier’s tender must satisfy the contracting authority’s requirements and be the most advantageous in terms of award criteria.

Amendment 94 to Clause 18 is technically a consequence of Amendment 126. Amendment 126 amends Clause 22 to make it clear that the contracting authority may set a number of award criteria against which it will evaluate tenders or may set only one criterion. That has led to consequential Amendment 113 to Clause 19.

Amendments 111 and 114 clarify the drafting to confirm that Clause 19(6) is talking about exclusion by reference to intermediate assessment of tenders in Clause 19(5)(b) and that the timing of assessment may vary.

Amendment 134 confirms that Clause 24 applies to the process to become a member of a dynamic market and a process for the award of a contract under a framework, as well as competitive tendering procedures under Clause 19. This has meant moving the clause to later in the Bill, and it will be under Chapter 6, “General Provision about Award and Procedures”. Amendments 137, 140 and 145A are all consequential.

Amendment 135 simply amends the term “terms of a procurement” to “procurement documents”. I know that noble Lords are rightly concerned about definitions. This is to ensure the clause operates effectively for the award of contracts under frameworks and for applications for membership of a dynamic market. Amendments 136, 138, 139, 142 and 143 are all consequential.

Amendment 145 expands the definition of “procurement documents” in this clause to cover documents used for frameworks and dynamic markets. I beg to move.

[The Deputy Speaker (Baroness Newlove) (Con)]

My Lords, I now call the noble Baroness, Lady Brinton, to speak remotely.

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The noble Lord, Lord Aberdare, made some really important points when talking to his amendments about the need to support small suppliers and the issues that many have with prompt payment. I know that the Bill is looking hard at doing something around late payment and prompt payment; I hope that we can achieve this positively through what we are doing today. I fully support the noble Lord in his efforts to improve this situation.

[Lord True (Con)]

My Lords, I thank noble Lords for another interesting debate that I have enjoyed listening to. Some thoughtful points have been made. I must say at the outset that Ministers are responsible for many things but we are not responsible for groupings. We just get told what we must do. It would have been quite possible, through the usual channels, to agree to de-group those amendments and put them separately but, as we say, “Them’s the breaks”.

Notwithstanding the illogicality that has been pointed out, I will address what is before us. By the way, I thank the noble Baroness, Lady Hayman of Ullock, for what she said about the official Bill team, who support us all in Committee on the Bill. I fully endorse what she said. Many of them are here to hear it; if they are doing their job, they will probably notice it in Hansard but, none the less, I will make sure that they do.

Amendment 101A, 528A and 528B, tabled by the noble Baroness, Lady Hayman of Ullock, and the noble Lord, Lord Coaker, and Amendment 528C, tabled by the noble Baroness, Lady Brinton, and the noble Lord, Lord Scriven, cover health and procurement, as we just discussed. I candidly acknowledge that, sometimes in life, there are minor frustrations. I know that the Committee is understandably wrestling with the issue. My noble friend Lady Scott—I am sorry, I always call her Jane—tried to answer the question asked by the noble Baroness on two occasions but I will come on to say what we have tried to do about this; indeed, I will now read out the answer that I have been given.

These amendments would significantly extend the rules in Clause 18 by imposing additional requirements on authorities to have regard to a range of health sector-specific issues when awarding contracts for the research, development or supply of health services or health products. As we have already touched on at various points in the debate, contracting authorities need to make procurement decisions on a case-by-case basis. It would not be appropriate to include wider policy objectives, such as those suggested, in primary legislation. This could jeopardise the achievement of value for money and make it harder for small businesses to bid for these health services and health products contracts.

Amendment 528C would override the healthcare procurement regulation-making powers set out in the Health and Care Act and make the Bill apply instead to all healthcare purchasing—the challenge set out by the noble Baroness, Lady Brinton. The position is that the Department of Health and Social Care is currently preparing regulations, following public consultation, which will implement a new provider selection regime specifically designed for the procurement of healthcare services delivered to individual patients and service users. Obviously, noble Lords will have the proper opportunity to scrutinise and debate the implementation of these powers when they are laid in Parliament, through the affirmative procedure.

On the question raised by the noble Lord, Lord Scriven, the recent DHSC consultation on proposals for its new provider selection regime acknowledges the need for integrated procurement for health and social care services. Existing procurement legislation recognises and provides for mixed procurement approaches, and relevant details will be included in the DHSC’s forthcoming regulations and guidance. Parliament will have the opportunity to scrutinise these under the affirmative procedure.

I know that noble Lords have said that they not entirely satisfied with this. It is the situation that clinical services for individual patients are with the health service. My noble friend highlighted—as I said on day three in Committee—that we would write to the noble Baroness, Lady Brinton, on how the interface between the Procurement Bill and the health Act will work in practice, I reassure noble Lords that that is being prepared. We will seek to pick up many of the questions that noble Lords have asked on each day of the debate so far, in this area. That will be put before your Lordships before we get to group 14—I hope it is not group 13—or whenever we get to it. It is being done, but I have heard what noble Lords have said. I can tell the Committee that I am also writing personally to the Secretary of State for Health to seek further clarity on when the regulations will be available for scrutiny. I have heard the requests from your Lordships in this area.

I turn now to Amendment 118 tabled by my noble friend Lord Lansley, whose appearance varies today—I will not hurt him by saying it is improved today. This amendment would modify Clause 20 to require the tender notice to provide a period during which “suppliers may ask questions” and have the answer provided “to all potential suppliers”. Under the Bill regime, there is nothing preventing potential bidders asking for further information or clarification of matters within the tender notice or associated tender notice documents; in fact, this is standard practice in procurement procedures. There is a risk that including a specific provision to this effect might suggest that questions cannot be asked outside that window. We would not want to suggest that there comes a point at which interested suppliers can no longer ask questions of contracting authorities. With that in mind, I hope I have reassured my noble friend—when he comes to read this section—that the Bill already allows for the circumstances he wishes to see.

Amendment 119 and others relate to the Prompt Payment Code. Amendment 119 seeks to require being a signatory to the Prompt Payment Code to be used as a condition of participation in the award of a public contract. We are committed to ensuring prompt payment to suppliers. However, requiring that every potential bidder becomes a signatory to the Prompt Payment Code to participate in the procurement would be too onerous a requirement. Therefore, while we encourage suppliers to sign up to a Prompt Payment Code, we do not consider it proportionate for us to legislate for it in this Bill.

Amendment 120, tabled by the noble Lord, Lord Aberdare, would extend the consideration of whether conditions are proportionate for the purposes of subsection (1) to include the accessibility of the contract to as broad a range of suppliers as possible. This is an abiding theme in your Lordships’ Committee. The primary purpose of Clause 21 is to ensure that the suppliers that participate in the procurement are capable of delivering the contract, but also that these conditions are restricted to only those which are needed to deliver the contract.

The noble Lord asked what we are doing to stop unreasonable requirements of SMEs and others, and I include in this broad range social enterprises and charities. As I say, the intention of Clause 21 on conditions of participation is to prohibit disproportionate or unreasonable requirements being put on contracts that would end up excluding SMEs. The authority must be satisfied that conditions of participation consider only the legal and financial capacity and technical ability of the supplier to perform the contract in question, and that there are proportionate means of doing so. We will look carefully at the noble Lord’s words. That is the intention behind Clause 21, but we will bear in mind what he said.

On the previous day of Committee, we discussed the importance of creating opportunity for SMEs and others. There was a broad ask from your Lordships. We think the clause as drafted helps with that, as conditions are pared back to focus on delivery. I have already committed to holding an engagement during the Recess about what more we can do to support SMEs. In the meantime, we consider that this amendment is not required, but we will give it some reflection. Is “reflection” a parliamentary word? It sounds like a word that one of the right reverend Prelates might use.

[Lord Davies of Brixton (Lab)]

Will the Minister make it clear: when he says SMEs, does that embrace small charities and voluntary organisations, which I know are anxious about their situation under the process?

[Lord True (Con)]

Yes, my Lords, I believe I did say that. In parliamentary terms, I am reiterating what I said. SMEs cover, for the purpose of this, voluntary organisations, social enterprises and charities. I think I have made clear my profound personal belief that these are part of the vital warp and woof of our society.

Amendment 121, proposed by noble Lord, Lord Wallace of Saltaire, aims to ensure contracting authorities take reasonable steps to verify that the supplier and any subcontractors are able to deliver the contract. Although we absolutely agree that contracting authorities need to do this in practice, we do not think it is necessary to add this provision into legislation, as the very operation of procurement is geared to this—the setting of conditions of participation, award criteria and evaluation processes, to name a few. While, as part of the Bill, we are improving supply chain visibility, we do not want to overengineer—noble Lords must have heard me say this too many times—legislative requirements for contracting authorities to investigate these matters in every procurement process as a box-ticking exercise.

Amendment 122A, which was proposed by the noble Baronesses, Lady Thornton and Lady Bennett of Manor Castle, and supported by others, would give the Minister the ability to exempt contracting authorities from the tests that must be satisfied when setting award criteria in order to allow policy priorities to take precedence to create additional public value. The Delegated Powers and Regulatory Reform Committee might have something to say about such an amendment if it were put forward by a Minister. It sounds very much as if certain rules need not apply in this particular place or contract. It certainly has a whiff of the dispensing power that the Glorious Revolution was designed to do away with, although I know noble Lords will say there is too much Henry VIII in too much legislation. So, in a technical sense it would be a difficult thing to do, but we think it would be undesirable.

We want all award criteria to be clear, measurable, relevant, non-discriminatory and proportionate to avoid unnecessary burdens on suppliers. We believe that this, together with our plans to publish a national procurement policy statement, which we debated earlier, and the requirement for authorities to maximise public benefit, will be sufficient. I have heard scepticism, but we believe that is the case.

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[Baroness Worthington (CB)]

Sorry to interrupt, but just to clarify, it seems to me that the reference to “maximising public benefit” in the Bill is completely and utterly superfluous and has no meaning. The Minister’s response has further confirmed that the only criteria that can really be taken into account are value for money and cost. We will need to return to this at Report, because it now seems very clear that this is not an accident or some kind of desire for flexibility; it is really saying that there is only one thing that counts, and that is cost—and in the short term.

[Lord True (Con)]

I respectfully disagree with the noble Baroness. It is acknowledged from the other side that value for money is an extremely important criterion. It is one of the things in Clause 11. We have discussed mechanisms and we have had discussions about the national procurement policy statement, wherein, in the draft on the table, lie large numbers of things which the noble Baroness is seeking. It is frankly not the case to say that there is nothing in here other than value for money—that is not the Government’s submission to your Lordships. The Bill takes forward the change from the use of the term “most economically advantageous tender”, MEAT, to “most advantageous tender”, MAT. That is to reinforce the precise message that procurers can take a broader view of value for money than simply lowest price. We believe that the amendment tabled by the noble Baroness is not necessary.

Amendment 129A, in the name of the noble Lord, Lord Aberdare, would make it explicit in the Bill that contracting authorities must always include an objective mechanism for determining price or cost after contract award where and to the extent that value for money, but not price or cost, is evaluated when assessing which tender is the most advantageous. We believe that commercial practice and other provisions in the Bill mean that this amendment is unnecessary. It would be highly unusual for contracting authorities not to include an evaluation of price or cost when assessing value for money in their procurements. This is good commercial sense.

Further, contracting authorities are not free to act unbounded. The procurement objectives, including those in Clause 11, will apply. I do not think it is necessary to expressly legislate for it. We will, however, publish guidance to contracting authorities on evaluation. The noble Lord may well ask me when the guidance is to be published. He also asked how we can be sure that that guidance will bite further. It may be that I can come forward with further information after Committee.

I am sorry, I have been given a long speech—

[Baroness Noakes (Con)]

We would not mind if my noble friend made it shorter.

[Lord True (Con)]

I would be happy to. There were a lot of amendments. I do not want to break down and not continue, but I have about four more minutes to go. With the Committee’s permission, would my noble friend—

[Baroness Scott of Bybrook (Con)]

Would my noble friend like me to take over his speech, as he is coughing?

[Lord True (Con)]

Yes please.

[Baroness Scott of Bybrook (Con)]

My Lords, Amendment 131, tabled by the noble Lord, Lord Best, would prohibit contracting authorities applying relative assessment methodologies for price, costs or value-for-money award criteria, with the aim of preventing “race to the bottom” behaviour by suppliers and helping contracting authorities achieve safe, quality and value-for-money outcomes.

The objective of the Bill is to make public procurement more flexible for contracting authorities and suppliers, not less. In deciding how to assess tenders, contracting authorities must be able to determine what is important to them and the best means of assessing this. In some cases, price may be more important than others and, in particular, price assessment methodologies may be more appropriate in certain circumstances. I must also stress that contracting authorities will be very aware of the need for safe outcomes and that those cannot be compromised. To reiterate, we will publish guidance on assessment to help contracting authorities decide how best to assess tenders.

Amendment 147, tabled by the noble Lord, Lord Hunt, would require a Minister, within three years of the Bill being enacted, to undertake a review of the impact of the rules on how contracts subject to a competitive procedure must be awarded. In particular, the review must assess the impact of the change from “most economically advantageous tender”, commonly referred to as MEAT, to “most advantageous tender”, commonly referred to as MAT. On the delivery of social value, and whether the needs of service recipients have been met under contracts, the change from MEAT to MAT sends a much clearer message to contract authorities that the contracts do not have to be awarded on the basis of the lowest price. I can assure the noble Lord that the matters he refers to are within the scope of MAT, where they are relevant to the contract being procured.

Amendment 149, tabled by my noble friend Lord Lansley, would make explicit that contracting authorities may exclude a supplier where it has failed to explain satisfactorily why the price or cost proposed in its tender appear to be abnormally low. We discussed this point during a recent SI debate, and I welcome his contribution. I appreciate that tenders may appear abnormally low for a variety of reasons, some of which ought to concern contracting authorities. The Bill’s silence on this point is not intended to discourage authorities seeking to understand the proposed price and cost or interrogating suppliers where they appear to be abnormally low. Authorities are already under an overarching duty to award contracts to the most advantageous tender. This should be sufficient to allow for questions to be asked of suppliers about proposed price and costs, and authorities can structure their evaluation to ensure that tenders can be rejected where the authority has reason to believe a tender is abnormally low.

In summary, this Bill aims to deliver a simpler regulatory framework. It therefore does not include every possible action a contracting authority might wish to take in assessing the validity of tenders or awarding contracts. This approach is better than the existing EU approach, as it offers increased flexibility to design efficient, commercial and market-focused competitions, while reducing burdens for smaller firms. Therefore, I respectfully request that these amendments are not moved.

[Lord True]

My Lords, I thank your Lordships for your indulgence in letting my noble friend complete the speech. I am most appreciative. Thank you.

Amendment 83 agreed.

Procurement Bill [HL]

Lord True Excerpts

Committee stage
Monday 18th July 2022 Grand Committee

Moved by

[Lord True]

89: Clause 15, page 11, line 30, leave out from “must” to end of line 31 and insert “in relation to the award—
(a) treat the supplier as an excluded supplier for the purpose of—(i) assessing tenders under section 18 (competitive award), or(ii) awarding a contract under section 40 or 42 (direct award), and(b) exclude the supplier from participating in, or progressing as part of, any competitive tendering procedure.”

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

My Lords, this group seeks to deal with amendments relating to the process for excluding suppliers and with the debarment list. I recognise that there is considerable interest in this topic. Amendments relating to the grounds for the exclusion of suppliers will be dealt with separately in a later group. I look forward with interest to submissions from noble Lords, but there are a number of government amendments in this group.

Amendment 89 ensures that suppliers which gained an unavoidable unfair advantage through involvement in preliminary market engagement are excluded from the procurement in question.

Amendment 148 is consequential on Amendment 93, which was debated last week. Amendment 93 clarifies that the authority’s requirements and award criteria are two separate concepts.

Amendment 154 broadens the concept of an entity associated with the supplier for the purpose of the exclusion grounds. This concept covers entities which are being relied on to meet the conditions of participation and is expanded by this amendment to also cover entities which may not be involved in the delivery of the contract. An example would be a consortium member providing financial backing to the supplier in order to meet conditions of participation relating to financial capacity. This aligns the concept of associated entities with the existing concept in Clause 21. An exception is made in respect of exclusions for guarantors such as banks, where it would be inappropriate to consider the exclusion grounds.

Amendment 150 is the lead of 21 amendments which all serve to change the term “associated supplier” to “associated person” for the purposes of the exclusions regime. This is consequential on Amendment 154 because the entities being relied upon to meet the conditions of participation may not be involved in the actual delivery of the contract. It is therefore accurate to refer to them as “persons” rather than “suppliers”.

Amendments 151, 159 and 166 require contracting authorities to notify suppliers when they are considered to be excluded or excludable by virtue of an exclusion ground applying to an associated person or subcontractor. These amendments are linked to Amendments 168 and 171, which require ministerial consideration before a supplier is notified and given the opportunity to replace an associated supplier or subcontractor when they are considered by the contracting authority to be a threat to national security.

Amendment 162 requires contracting authorities to ask for details of intended subcontractors and to check whether any intended subcontractors are on the debarment list, as part of determining whether the supplier is excluded or excludable. Amendments 163, 164, 165 and 398 are consequential.

Amendment 169 corrects a drafting error which incorrectly described suppliers subject to the exclusion ground on national security as being “excluded” when they are in fact “excludable”. Amendment 170 is also a technical amendment.

Amendments 175, 182, and 414 clarify what it means to treat a supplier as an excluded supplier in relation to the award of a public contract. They make it clear that contracting authorities are required to disregard tenders from such suppliers and prevent such suppliers from participating in, or progressing as part of, any competitive tendering procedure.

Amendments 176 and 178 provide for the list of improper behaviour at subsection (4) of Clause 30 to be an exhaustive list. It is important to be clear on the circumstances in which a supplier has acted improperly, given that the consequences are exclusion. Amendment 339 removes financial and other resources of suppliers from the list of the matters that contracting authorities may have regard to in setting proportionate requirements for suppliers to provide particular evidence or information as to whether exclusion grounds apply and whether the circumstances giving rise to any application are likely to occur again. Proportionality is sufficiently and more appropriately achieved by having regard to the nature and complexity of the matters being assessed, which is also listed. This amendment aligns with the matters that contracting authorities must have regard to in considering whether a condition of participation is proportionate, as specified in Clause 21.

Amendment 349 is made at the request of Northern Ireland and provides that transferred Northern Ireland authorities should make notification of exclusion to a department in the Northern Ireland Executive that the authority considers most appropriate, rather than a Minister of the Crown. This is necessary to provide information to the relevant department, for example to consider a potential investigation of suppliers under Clause 57. Amendment 352 requires that a Minister of the Crown must consult with the Northern Ireland department that the Minister considers most appropriate —rather than any Northern Ireland department—before entering a supplier’s name on the debarment list or removing an entry from the debarment list following an application for removal under Clause 60.

Amendment 399 extends the circumstances in which there is an implied right for a contracting authority to terminate a contract where a subcontractor—which the supplier did not rely on to meet the conditions of participation—is an excluded or excludable supplier. The amendment includes circumstances where the authority checked the debarment list or asked for information about the subcontractor but did not know that the subcontractor was excluded or excludable prior to award.

Finally, Amendment 402 requires contracting authorities to seek the approval of a Minister of the Crown before terminating a contract on the basis of the discretionary exclusion ground of national security. This is necessary to align with the other circumstances in which ministerial approval must be sought before relying on this particular ground. I beg to move.

[Lord Coaker (Lab)]

In keeping with the obvious mood of the Committee, I actually do not want to say very much either on this particular group. The interest I had was in the amendment from the noble Lords, Lord Wallace and Lord Fox, in this group, on how excluded suppliers demonstrate their reliability following the application of an exclusion order, and the process of self-cleansing. I was particularly interested in what this process of self-cleansing means. I am presuming—from the Minister’s helpful introduction—that the company is excluded for X reason, and is told that in the notice that goes to an excludable supplier, and then it goes back to the Government and says, “We’ve undertaken the process of self-cleansing and therefore the problems that you highlighted with us are no longer applicable”. So, I wondered whether the Minister could say a little bit more about the process of self-cleansing, which was the element that I found a little bit vague, if I am honest, and goes with many of the problems we have: the Minister talks about a “proportionate response” from the Government, and those sorts of phrases, and again we get into the problem of definition.

The other point I will make concerns what the Minister rightly pointed out: Schedules 6 and 7 outline the grounds rather than the process. There are the mandatory grounds in Schedule 6 and the discretionary grounds in Schedule 7, both of which a contracting authority might think applies to it. On the grounds in these schedules, can the Minister give us an example of what the process or timescale will be and an example of how it would work? Presumably the Minister sends this to the contracting authority and says, for example, “We think you should be excluded because of this in Schedule 6”, and if the company says, “No, this isn’t the case”, a discussion takes place. It would be helpful for the Committee to understand this process.

Finally, can the Minister confirm that, as I read it, there is also an appeals process? If the Government decided that a firm or supplier should be excluded, am I right in saying that this decision could be appealed? If it is appealed, who is it appealed to—presumably not the same person who made the decision to exclude them in the first place? I am querying the independence of that appeal process and the amount of time that this would take. A little more detail would be useful on the matter of an “excluded supplier” and an “excludable supplier”.

I do not want to keep the Committee any longer on this group of amendments, because the Minister’s helpful outline clarified some of the points I would have made about why “person” changes to “supplier”. I look forward to the Minister’s response to my questions.

[Lord True (Con)]

My Lords, I think that in a test match that is called putting the spinner on early when the batsman is better at fending off fast bowling.

The noble Lord asked a number of questions, which I am not in a position to answer at this juncture. We believe that self-cleansing is an important process because exclusion is a risk-based measure as perceived; it is not a punishment. As such, suppliers should be encouraged to clean up their act and given the right to make the case that they addressed the risk of misconduct, or the other issues, occurring again. It is for contracting authorities to decide whether the evidence they have seen is sufficient to reassure themselves that the issues in question are unlikely to occur again. The noble Lord asked a further question about what happens should there be a difference of judgment. The formal position is that it is for the contracting authorities to decide whether self-cleansing has occurred.

It is not our intention to make the exclusion of suppliers more difficult for contracting authorities, because many noble Lords, on a number of subjects, have asked for the opportunity to exclude suppliers. The Bill seeks to ensure that all the relevant issues can be considered. We believe that suppliers will thereby be encouraged to take as much comprehensive action as possible to avoid recurrence if they seem to fall foul of these risks. I repeat: the decision must be made by the contracting authority, and the burden to present remedial evidence to avoid exclusion is on the supplier. The lack of remedial evidence—or if the remedial evidence is inadequate—may give the contracting authorities sufficient reason to conclude that the issues in question are likely to occur again. However, I will look very carefully at this flighted ball that the noble Lord has sent. We accept the need for guidance on self-cleansing to accompany the legislation, and can assure the noble Lord opposite that this will be published as part of the implementation package for the Bill.

I cannot ask the noble Lord, Lord Wallace, not to move his amendments, as he is not here, but I hope that is something of an answer to the noble Lord, who has amendments in this group.

[Lord Coaker (Lab)]

That is quite helpful. Further to that and to make sure I have understood, would an excluded or excludable supplier be put on a debarment list? I refer to Clause 61, which is titled “Debarment decisions: appeals”. Am I reading this right or have I got it wrong?

[Lord True (Con)]

We will come on to the details of debarment on a later group—on Clause 61, I believe. A supplier may certainly appeal against the decision of a Minister, who ultimately places the debarment list. On the process of self-cleansing, which we were talking about, the contracting authority, not the Government, undertakes exclusion. It will notify the supplier that a ground for exclusion applies; the supplier may then make representations and submit self-cleansing evidence, as I previously discussed. The contracting authority then weighs it up and decides on exclusion.

This is the further wrinkle that I had not answered in saying rather more words than the succinct selection I have been given, but it confirms what I was saying: the supplier may challenge, but through the courts under the remedies regime, if it disputes the contracting authority’s judgment on self-cleansing.

We will come on to debarment decisions and permanent exclusion on amendments after Clause 61, but certainly a supplier may appeal against a ministerial decision.

In moving government Amendment 89 in my name, I request that the other amendments are not moved.

Amendment 89 agreed.

--- Later in debate ---

Moved by

[Lord True]

90: Clause 16, page 11, line 33, leave out subsection (1) and insert—
“(1) If a contracting authority carries out preliminary market engagement, the authority must—(a) publish a preliminary market engagement notice before publishing a tender notice, or(b) provide reasons for not doing so in the tender notice.”

--- Later in debate ---

[Lord True (Con)]

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

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

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

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

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

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

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

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

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

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

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

[Lord Hunt of Kings Heath (Lab)]

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

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

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

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

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

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

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

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

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


FoI legislation.

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

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

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

--- Later in debate ---

[Lord Clement-Jones (LD)]

Thank you. My Lords, if noble Lords thought that my previous speech took a long time, they will not be happy with the second half of it, which concerns the technical parts. These relate to Amendments 452A, 452B, 519A and 519B, which are technical amendments from the Local Government Association designed to ensure that all notices come within the new digital platform.

Amendments 452A and 452B relate to Clause 86(1) of the Bill, which sets out that appropriate authorities may by regulations make provision about

“the form and content of notices, documents or other information to be published or provided under this Act”

and

“how such notices or documents are, or information is, to be published, provided or revised.”

The amendments would help ensure that future regulations do not contravene the purpose of the single digital platform wherever possible and support the move to progressively streamline the many different publication requirements for procurement information and contract-spend data placed on local government and the public sector as a whole through different pieces of legislation.

Amendment 519A would omit Section 89(4)(b) and 89(5) of the Transport Act 1985. This would remove the requirement for local authorities to issue notices of tender individually to all persons who have given to that authority a written notice indicating that they wish to receive invitations to tender for the provision of local services for that authority’s area. This would bring the requirements to advertise tenders for transport services into line with those set out in the Bill and facilitate the ambition to create a single digital platform where all public tenders are advertised in one place.

Finally, Amendment 519B would amend the Service Subsidy Agreements (Tendering) (England) Regulations 2002 by removing Regulations 4 and 5. Regulation 4 requires local authorities to publish information relating to tender invitations in accordance with Part 1 of Schedule 1 to the same regulations. Regulation 5 requires local authorities to publish tender information to the general public at times, in places and in a form which are convenient to the public, and to publish notices of tenders in local newspapers. Removing the two regulations would ensure that information about contract pipelines and contract awards for service subsidies will in future be published in the same place and format as information about any other public contract, to improve consistency and accessibility. A service subsidy in this context is where councils subsidise companies operating public passenger transport services to run services on routes which may not otherwise be economically viable, for example bus services in rural areas. I hope that has explained these rather technical amendments and very much hope that the Minister understands the motive behind them.

[Lord True (Con)]

My Lords, I apologise for not rising sooner; I never know how many spokesmen are going to rise from the various Benches. This has been another interesting and informative debate. It has also been extremely wide-ranging, as has become our custom in this Committee. I will try to answer as many points as possible, but there are things coming from various areas that we will look at carefully. This is your Lordships’ Committee and therefore it is perfectly reasonable for points to be made. My aspiration is to answer, but I may not be able to answer them all.

Before I get on to the main amendments, I will address various things I was asked about. The noble Baroness, Lady Boycott, asked about the Palantir contract. I am advised that this is a DHSC NHS contract. I am not informed in my department of the details she asked for, but I will ask my officials to follow up and respond to her later.

The noble Lord, Lord Berkeley, asked about a Written Ministerial Statement made last week. The timing of the publication of the participation in government commercial activity guidelines for Ministers referred to in that Statement is not connected to this Bill. The guidance sets out how Ministers can be appropriately involved in commercial activity, including procurements, under the current procurement rules.

I was anticipating in a later group—indeed, there are some relevant amendments—a debate about Hikvision. I am grateful for what the noble Lord, Lord Alton, said, as well as for the opportunity to speak to him about this matter, which, as he said, has some security considerations. So far as the actuality of what might or could happen is concerned—that is a potential rather than a loaded spin on it—it is ultimately up to contracting authorities to apply the grounds for exclusion under this Bill on a contract-by-contract basis. The national security ground is discretionary, meaning that authorities can take into account a range of factors, including the nature of the contract being tendered. However, the debarment regime will allow for the central consideration of suppliers on the grounds of national security. As the noble Lord knows, the Government’s security group is working with the National Technical Authority and the Government Commercial Function on the government security aspects of this issue.

I appreciate the noble Lord’s impatience, given the sensitivities of the issue. Policy options are being worked out for how to mitigate the security risks posed by this type of equipment; they range from primary legislation to ban certain companies from the government supply chain to issuing more advice and guidance for contracting authorities. The Cabinet Office has also published guidance setting out the steps that all government departments must take to identify and mitigate modern slavery and labour abuse risks throughout the commercial lifecycle, focusing on the areas of highest risk. We may well return to this issue in debate on a later group, but I can assure the noble Lord that the matters he raised are ones that the Government are not minimising but currently considering.

[Lord Alton of Liverpool (CB)]

I am grateful to the Minister. Without pre-empting our debate later in the Committee’s proceedings, is he in a position now to respond to the letter to the Cabinet Secretary from Professor Sampson, which I referred to in my remarks earlier? If not, could that correspondence be made available to your Lordships between now and Report?

Also, has the Minister had a chance to look at the Foreign Affairs Select Committee’s report, which called for a total prohibition of Hikvision, and the decision not just of the United States Administration but of the European Parliament to ban Hikvision from their public procurement policies? Given the national security implications, as he said—earlier, I referred specifically to the suggestion that HS2 might procure and use Hikvision cameras on the whole of its new network—does the noble Lord not agree that this is something on which we should shine more light rather more urgently?

[Lord True (Con)]

Perish the thought that I might comment on the shelf life of HS2, but I do take what the noble Lord says very seriously. The fact is that some of the factors he mentions are taken into consideration. This issue is live. I accept his chiding. I will look carefully at his words and at what he has asked to be published or not published, but I hope that we may get a resolution of this matter, because I understand the demand, the request and the desire for a clear and public solution to the points put forward by the noble Lord. We will see what we can do, if not before the next group then certainly before we come back to this issue on Report.

--- Later in debate ---

[Lord Alton of Liverpool (CB)]

My Lords, before the noble Lord continues, I hope he will go back to the original statement to reflect further on whether this information could be published. This was an open letter from Professor Sampson that was published—it appeared in the national newspapers that the letter had been sent to the Cabinet Secretary—and I would have thought that most of the issues raised in that letter are things to which Members of your Lordships’ House should certainly be privy.

[Lord True (Con)]

My Lords, I have given further information. The noble Lord referred to a whole range of factors which he asked to be considered and asked me to respond to the Foreign Affairs Select Committee report and so on. I said I would reflect on all he has said and come back, but I gather there has been some reflection on this aspect of his menu. We will no doubt maintain this dialogue.

The amendments we were talking about—Amendments 448, 449 and 449A—all relate to freedom of information and seek to bring external suppliers into the scope of the Act. In practice, the Government do not believe that the amendment would add much and could impose burdens on businesses that would make public contracts unattractive. The public authority will already hold all the details of the tendering process and the resulting contracts, and that information can already be requested under the FoI Act. The desire has been expressed in some quarters to reform the FoI Act, but we are looking at the proposals before us.

Furthermore, information held by a supplier or subcontractor on behalf of a contracting authority is already within scope of the Act. The amendments also introduce unhelpful limitations on the ability of contracting authorities to withhold commercially confidential information. This is a point of debate, but the FoI Act sets out the duties on public bodies when they receive requests for information under the Act. Restating the operation of that legislation is not necessary in this Bill. The Bill sets out in detail what information is required to be published and the triggers for publication, as well as requiring contracting authorities to explain why they are withholding any data.

Amendment 449A also seeks to extend the enforcement powers of the Information Commissioner to suppliers and subcontractors and open them up to criminal prosecution. The Information Commissioner already has enforcement powers in relation to public authorities and therefore in relation to the information held by others on their behalf. We believe that transparency is a sanction for authorities that fail to fulfil their obligations to publish as the failure will be obvious to the public. Failure to publish information required by the Act could be subject to judicial review, and there is also potential for a civil claim for breach of statutory duty pursuant to Clause 89 if the supplier can demonstrate that it suffered loss or damage arising from a breach of a publication obligation. Additionally, an appropriate authority has a power under Clauses 96 to 98 to investigate a contracting authority’s compliance with the Act, make recommendations and, if appropriate, provide statutory guidance to share lessons learned as a result of the investigation. Recommendations issued under Clause 97 come with a duty on the contracting authority to have regard to those recommendations when considering how to comply with the Act, and failure to do so would also leave the contracting authority open to judicial review.

Where a contracting authority is required to publish something that includes sensitive commercial information, it may withhold or redact that information only if there is an “overriding public interest” in doing so. Where the commercial confidentiality exemption is used to withhold or redact information, this must be publicly recorded. As such, there will be full transparency about what has been withheld and why, and interested parties can always challenge such decisions by requesting the withheld information under FoI law. This process is subject to the oversight of the Information Commissioner. Interested parties can also complain to the procurement review unit, which we discussed the other day.

Amendments 450 and 451 are from the noble Lords, Lord Wallace and Lord Fox. They are absent, and I send them best wishes for their respective aliments. Expertus dico: I have just had an aliment as noble Lords saw in the last Session, and I very much feel for all noble Lords. These amendments would make it harder for contracting authorities to withhold information in instances where there is sensitive commercial content. The overall result could be the inappropriate disclosure of sensitive information or fear of such disclosure, both of which are likely to have a chilling effect on suppliers bidding if they cannot be confident that their commercial secrets will be respected by contracting authorities. This could lead to a reduction in choice, quality and value.

Amendment 452, tabled by the noble Baronesses, Lady Worthington and Lady Boycott, and Amendment 455, tabled by the noble Baroness, Lady Hayman of Ullock—which I think is intended to address the central digital platform, not the data on the supplier registration system—propose to introduce various requirements about the accessibility of published information and how it is licensed. The Government have already committed to a publicly available digital platform which will allow citizens to understand authorities’ procurement decisions. This data will be freely available. It will remain subject to data protection law and redaction under the exemptions set out in Clause 85.

However, not all information should be published on the central digital platform. For example, some associated tender documents produced under Clause 20 in certain procurement exercises may need to be circulated to only a limited group of suppliers, for instance, where that information is sensitive. As set out in the Green Paper, we will apply the open contracting data standard, and specify this in more detail in secondary legislation. Published data will be covered by open government licence where possible; personal data contained on the platform will be available without any licence.

Amendments 452A and 452B, tabled by the noble Lord, Lord Clement-Jones, would amend Clause 86 to ensure that regulations require publication on a single digital platform. These amendments are unnecessary as the Government have already committed to providing this platform.

The noble Lord, Lord Clement-Jones, has tabled Amendment 456, which imposes obligations on an appropriate authority in relation to standards and quality of data on the platform. Clause 86(1)(a) already makes specific provision for regulations to set out both the form and the content of information to be published under the various notices required by the Bill. This power is there to ensure that regulations can establish the very standards and formats that I believe the noble Lord is seeking.

On the noble Lord’s proposed new paragraph (b), a notice is usually a snapshot of a moment in time. Most notices should not be updated after the initial publication and it is the legal responsibility of the contracting authority publishing the information to ensure that it is timely, accurate and complete. The appropriate authority—a Minister of the Crown, a Welsh Minister or a Northern Ireland department—will not be in a position to verify all that information, which is why it is the responsibility of the contracting authority.

[Lord Clement-Jones (LD)]

My Lords, I apologise for interrupting, but can the Minister therefore explain why these time limits are so regularly and hugely overridden? The research shows, as I mentioned, that the Cabinet Office itself has a delay of 2.7 months compared with its legal obligation of 30 days. How does the Minister explain that, and why is no further action needed in terms of compliance?

[Lord True (Con)]

My Lords, if the Cabinet Office is sinning, I will take the matter away and look into it. I heard what the noble Lord said about time limits, but I do not have a specific response in this area at the moment, and nor can I either confirm or deny the figure he gave. We have undertaken to engage on these issues, and we will find the answers and will look very carefully at what the noble Lord said in his speech—or rather, his two speeches.

Amendment 458, tabled by the noble Baroness, Lady Hayman of Ullock, relates to the creation of a digital registration system for suppliers. The register of suppliers described in the Green Paper remains a priority, and provision for this register is set out in Clause 88.

Amendment 459, tabled by the noble Baroness, the noble Lord, Lord Coaker, and others seeks to introduce a requirement for government departments to produce reports on carbon emissions relating to procured goods, services and works. I made the Government’s position clear previously that such matters should not be included in the Bill and that remains our position.

I thank the noble Baroness and the noble Lords, Lord Coaker and Lord Clement-Jones, for their Amendment 459A. However, the Government are opposed to this amendment as well. It would create an obligation to have the central digital platform operational within six months of passing the Act. Just to be clear, Clause 86 creates the powers that the Government will use to require publication on the single digital platform. Clause 88 is the basis of the supplier registration system, which is the “tell us once” system through which suppliers will communicate information about themselves to contracting authorities.

I understand from his helpful explanatory statement that the noble Lord, Lord Coaker, was referring to the former—the single digital platform. We do not wish to commit to such a timetable now, as it might not be necessary or possible to deliver the whole functionality of that platform to that timetable. As the noble Lord knows, there is already a six-month period of pre-implementation built in, but I hear what he says and I think there is broad agreement in the Committee that this development is desirable. I welcome the positive response from the Liberal Democrats and Her Majesty’s Opposition, having had discussions about it, and I will take away what they say.

[Lord Coaker (Lab)]

Can I just say—because sometimes these things pass by and they should be noted—that we are very pleased with that commitment from the Minister and thank him for it?

[Lord True (Con)]

Right. Unfortunately, the noble Lord will be disappointed by my response to the second part of the amendment, because I have already explained that contracting authorities will not be required to publish all information to the central platform.

I turn finally to Amendments 519A and 519B from the noble Lord, Lord Clement-Jones. The Bill exempts contracts for public passenger transport services under paragraph 17 of Schedule 2, as their award is regulated by Department for Transport legislation. We believe that it is more appropriate that the transparency provisions governing these arrangements are kept within their existing legal regime, and local authorities are therefore not placed under an unnecessary burden of trying to comply with two separate regimes simultaneously when placing such contracts. I have, however, asked my officials to engage with the Department for Transport to better understand how we can ensure that both regimes are aligned—I think that was one of the points behind the noble Lord’s remarks.

I thank the noble Lord for his generous remarks. Having been a bit flinty on a number of the others, I will none the less, as ever, study carefully Hansard and your Lordships’ very well-informed submissions. Against that background, I commend the government amendments in my name and respectfully request that other amendments in the group not be pressed.

Amendment 90 agreed.

Moved by

[Lord True]

91: Clause 16, page 11, line 36, after “conduct” insert “, or has conducted,”

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[Lord True]

93: Clause 18, page 12, line 17, after “considers” insert—
“(a) satisfies the contracting authority’s requirements, and(b) ”

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[Lord True]

98: Clause 18, page 12, line 29, leave out “must” and insert “may”

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[Lord True]

102: Clause 18, page 12, line 34, at end insert—
“(4A) In this Act, a reference to a contracting authority’s requirements is a reference to requirements described in the tender notice or associated tender documents (see section 20(5) and (6)).”

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[Lord True]

106: Clause 19, page 13, line 14, at end insert “(a “competitive flexible procedure”)”

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[Lord True]

108: Clause 19, page 13, line 18, leave out “tendering procedure other than an open” and insert “flexible”

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[Lord True]

115: Clause 20, page 14, line 8, leave out “procedure other than an open” and insert “flexible”

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Moved by

[Lord True]

117: Clause 20, page 14, line 21, at end insert—
“(5) A tender notice or associated tender document must detail the goods, services or works required by the contracting authority.(6) In detailing its requirements, a contracting authority must be satisfied that they—(a) are sufficiently clear and specific, and(b) do not break the rules on technical specifications in section 24.”

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[Lord True]

122: Clause 22, page 15, line 15, after “competitive” insert “tendering”

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[Lord True]

126: Clause 22, page 15, line 26, at beginning insert “if there is more than one criterion,”

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[Lord True]

132: Clause 23, page 16, line 14, leave out “tendering procedure other than an open” and insert “flexible”

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[Lord True]

134: Clause 24, page 16, line 29, at end insert—
“(A1) This section applies in relation to—(a) a competitive tendering procedure;(b) an award of a public contract in accordance with a framework;(c) a process to become a member of a dynamic market.”

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[Lord True]

142: Clause 24, page 17, line 5, leave out “terms of a procurement” and insert “procurement documents”

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[Lord True]

146: Clause 25, page 17, line 19, after “competitive” insert “tendering”

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[Lord True]

148: Clause 26, page 17, line 24, leave out from “assessing” to end of line and insert “tenders under”

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[Lord True]

150: Clause 26, page 17, line 32, leave out first “supplier” and insert “person”

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[Lord True]

155: Clause 27, page 17, line 38, leave out “tendering procedure other than an open” and insert “flexible”

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Moved by

[Lord True]

162: Clause 28, page 18, line 13, at end insert—
“(A1) A contracting authority must as part of a competitive tendering procedure—(a) request information about whether a supplier intends to sub-contract the performance of all or part of the public contract, and(b) seek to determine whether any intended sub-contractor is on the debarment list.”

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Moved by

[Lord True]

168: Clause 29, page 19, line 3, leave out “or exclude the supplier” and insert “, exclude the supplier or notify the supplier of its intention”

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[Lord Coaker (Lab)]

That is a point well made. Indeed, the whole issue of the increase in the use of regulations by the Government is something that various Select Committees and other committees have commented on. It is a real difficulty because you do not know what the regulations will be. The legislation just gives the power to the Secretary of State to make regulations; you then wonder what they will be.

If I understood her amendment right, the noble Baroness, Lady Noakes, asked why some provisions in the schedules, perhaps really important ones, do not apply if a supplier contravenes them before the Bill becomes an Act. It strikes me that the self-cleansing we talked about earlier would have to be pretty dramatic if, on 26 February 2023, a firm was found guilty of breaking some of the mandatory conditions laid out in Schedule 6 then, on 3 March, it said it had dealt with those but you could not take into account the five days before when it had broken a lot of the conditions because it was before the Bill become an Act. Is that really what the Government intend? I am not sure because, when I read it, I could not quite make this out. I think that the point of the amendment from the noble Baroness, Lady Noakes, is to try to understand exactly what the Government are getting at. What does “before” mean? There are a range of things in that.

The central point I want to make in speaking to our various amendments is that, if all these things are unnecessary around all these things that are really important, how are the Government going to achieve these objectives, many of which are part of their own policies? Many of us wish to see the Procurement Bill used as the vehicle to achieve that but the Government are resisting, and will resist, that. How will they be achieved if not through this Bill?

[Lord True (Con)]

My Lords, there is a wide gamut of public policy that enables a Government to achieve the objectives on which they stood for office; that is a broader philosophical argument. I am not certain whether the noble Lord opposite wishes to have more in Schedules 6 and 7—he has certainly mentioned one aspect—or whether he makes a plea that something should be taken out. If the Labour Party wants to make a submission to change things and excise individual aspects of Schedules 6 and 7, no doubt we will look at that as our discussion advances in Committee.

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[Baroness Neville-Rolfe (Con)]

As it is still Committee, can I just ask a question about tax and competition offences? I am not clear whether those are forward-looking or backward-looking, so if you are a company that, for example, has had a competition or a cartel offence—a minor offence in a subsidiary—are you saying that those groups will be on a debarment list and can no longer be engaged? Similarly, if somebody has had a tax argument, which people have had in the past, and that has been settled—I think there have been some big brands in the past, not that I have been involved, that have had such settlements—are we somehow now saying that those are pariahs, and they are not allowed to engage in procurement for the future? I would just like to be clear about this because my worry is about the perverse effects of this debarment list you are going to have.

[Lord True (Con)]

My noble friend makes an important point. There are elements in here which are looking back and there are elements which are about the present. Legal issues are raised here, and it is important that I come to my noble friend and the Committee with a very specific definition and response to her question in relation to tax and finances.

Amendments 174 and 317 proposed by the noble Lord, Lord Mendelsohn, and Amendment 179 from the noble Baroness, Lady Hayman, seek to bring matters related to prompt payment performance into scope of the supplier exclusion regime. Prompt payment is important; it is lifeblood, in many cases, to small enterprises. The Government are committed to ensuring prompt payment of suppliers, and there are a number of ways in which the Bill does this. For example, 30-day payment terms will apply throughout the public sector supply chain, regardless of whether they are expressly written into the contract. In addition, payment performance can be assessed as part of the award criteria, providing it is proportionate and relevant to the contract.

The Government encourage suppliers to sign up to the Prompt Payment Code. However, we submit that requiring every potential bidder to become a signatory to the Prompt Payment Code is too onerous on some suppliers and would discourage them from bidding, undermining the ability of contracting authorities to achieve value for money.

The noble Lord, Lord Hain, with support from others, proposed Amendments 184 and 187, which seek powers for Ministers to exclude suppliers which have acted in any way unlawfully or unethically. The noble Lord was abundantly clear about what he had in mind when he spoke to his amendments, although he did not stop there; he made broader points about multinational behaviour which I also listened to and took in. We believe that, in the way the proposal is drafted, the threshold is too low for such a serious measure of acting in any way unlawfully or unethically. Exclusion should be reserved for suppliers which pose a serious risk to contracting authorities or the public. We believe that it is also appropriate that the decision to exclude suppliers falls in general to the contracting authority running a procurement.

However, the exclusion grounds cover unethical conduct. Any serious breach of ethical or professional standards applicable to a supplier is deemed to be professional misconduct, whether or not those standards are mandatory. The noble Lord will be pleased to know that professional misconduct is a ground where a debarment case could be made, as drafted in Schedule 7, paragraph 12(1), although I make it clear that I am not commenting on any individual case. As the noble Lord, Lord Hain, told the Committee, I understand that he is meeting my right honourable friend the Minister to discuss this issue. The review led by Cabinet Office officials into the case that he asked for—and indeed the Prime Minister instructed to be done—is now complete and is currently being considered by the Minister. Unfortunately, I cannot say any more at this stage.

[Lord Hain (Lab)]

I am grateful to the Minister. I will not detain the Committee, except to say that I find it hard to understand that a company that has clearly acted unlawfully, let alone unethically, in another country simply lines up with the rest for government tenders. I do not understand how that is consistent with honest business practice, let alone honest government practice.

[Lord True (Con)]

My Lords, the noble Lord made a strong case on this before. He has repeated it in a shorter version. I have told the Committee that the review has been conducted, as he—and the Prime Minister—asked. That is now complete, so let us see what happens. I cannot give any more detail because I simply do not know it as I stand here. The new debarment list will allow Ministers to debar suppliers in the most serious cases and therefore there is no need to make the additional provision.

Amendments 310, 318 and 322 tabled by the noble Baronesses, Lady Boycott and Lady Young, seek to add conviction of any environmental offence as a ground for mandatory exclusion. The mandatory grounds for exclusion are by nature a blunt instrument. They require the supplier to face exclusion from every public contract for five years, as my noble friend Lady Neville-Rolfe pointed out, unless and until the risk of the issues reoccurring has been addressed. For this reason, they are reserved for the most serious forms of misconduct.

The inclusion of environmental offences in the discretionary ground reflects the fact that, for offences where a range of misconduct may be involved, it may be appropriate to take into account factors such as the nature of the contract being tendered or the level of environmental harm caused, before deciding to exclude a supplier. There is guidance from the Environment Agency on what constitutes environmental harm.

The noble Baroness, Lady Hayman of Ullock, and the noble Lord, Lord Coaker, proposed Amendment 329, which seeks to introduce a discretionary exclusion ground where a supplier’s tender violates applicable obligations in the fields of environmental, social and labour law. I have already explained why we elected to narrow the exclusion ground relating to breaches of such law.

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[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.

[Baroness Neville-Rolfe (Con)]

On modern slavery, the Minister is surely saying that there has to have been a conviction for somebody to be on the debarred list. The first person prosecuted under the Modern Slavery Act—I almost hesitate to say this—was Sainsbury, so they had a case against them. Sorry, I am just trying to understand this; is the Minister saying that they would therefore be on the debarment list? I do not think that is the intention.

[Lord True (Con)]

No: I said that the current rules are too weak. They do require the supplier to have been convicted. I am saying that we are moving beyond that to a different evidential base and test. I recognise the strength of feeling among noble Lords on this issue. I commit to engaging further with my noble friend and other Members of the Committee on this prior to Report. On that basis, I respectfully request that these amendments are not pursued.

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Moved by

[Lord True]

175: Clause 30, page 19, line 17, leave out from “must” to end of line 18 and insert “in relation to the award—
(a) treat the supplier as an excluded supplier for the purpose of assessing tenders under section 18, and(b) exclude the supplier from participating in, or progressing as part of, any competitive tendering procedure.”