Procurement Bill [HL]

Lord Wallace of Saltaire Excerpts

Committee stage
Wednesday 6th July 2022 Grand Committee

Moved by

[Lord Wallace of Saltaire]

18: Schedule 2, page 79, line 12, leave out paragraph 17
Member’s explanatory statement
This amendment is intended to allow a debate on a recommendation from the Delegated Powers and Regulatory Reform Committee in respect of Schedule 2. The Committee considers that the power under paragraph 17 “should be narrowed unless the Government can fully justify it”.

[Lord Wallace of Saltaire (LD)]

My Lords, the previous discussion has demonstrated the active concerns a lot of members of this Committee have that this Bill should not cramp the ability of local authorities to experiment with forms of local procurement, the encouragement of local enterprise, and so on. I had a message from a county council this morning on precisely that point. We are concerned about this. Perhaps there is enough room below the threshold, but we need to explore that a little more.

These amendments respond to the report on the Bill from the Delegated Powers and Regulatory Reform Committee. Members of that committee are here, so I shall be brief and defer to their expertise.

The Minister will be well aware that many in the Lords are deeply concerned about the Government’s determined move away from clear, detailed legislation towards skeleton Bills and executive discretion. The perhaps soon to depart Prime Minister campaigned to leave the EU on the promise of restoring parliamentary sovereignty but has worked instead to bypass Parliament wherever he can. The Minister for Brexit Opportunities and Government Efficiency, who, as far as I understand it, has some influence over this Bill, is pre-emptively arguing that the Prime Minister was elected by the people and not Parliament, and therefore does not have to go if he loses the confidence of Parliament. We all recognise that both Houses of Parliament are deficient in a number of ways and in need of reform, but, for the moment, we have the constitution that we have inherited, battered though it is, and the spread of Henry VIII powers across legislation is a breach of that constitution, as the DPRRC notes.

Amendment 18 therefore challenges the delegation of power to Ministers to make exempted contracts for the provision of public transport services. Amendment 21 similarly challenges the degree of autonomy given to Ministers in providing concession contracts for air services. Amendment 28, to the schedule on utility contracts, challenges the width of the powers granted to Ministers to make exemption determinations.

Amendment 31 is more egregious on the same theme. It would give permission for Ministers to specify by regulation which services will be subject to the light-touch regime for contracts and which will be excluded. The DPRRC’s comment on this is that the power

“should be narrowed unless the Government can fully justify it.”

I suspect that the Minister is unable to do that.

Amendment 208 also addresses the remarkably wide freedom given to Ministers with regard to light-touch contracts. Here, it goes into tertiary legislation, allowing Ministers by regulations to

“specify services of a kind specified in regulations of the authority under section 8”.

I hope that members of the Committee understand that; I am not entirely sure that I do.

Clause 86, to which I have tabled a stand part challenge, gives Ministers powers to make regulations about a range of documents on contracts and information about contracts. Clause 109 gives Ministers powers

“to amend this Act in relation to private utilities”,

requiring them to consult

“persons appearing to the authority to represent the views of private utilities, and … such other persons as the authority considers appropriate”—

but not anyone with any standing in terms of public or parliamentary accountability.

Clause 110, which is covered by Amendments 530 and 532, relates entirely to regulatory powers. Our amendments would implement the DPRRC’s recommendations to make pricing determinations for qualifying defence contracts subject to the affirmative procedure and restrict the ministerial freedom to raise financial thresholds above the rate of inflation. On all these clauses, the DPRRC argues that the breadth of ministerial discretion should be narrowed. It comments that, in a number of instances,

“the Government … have chosen this approach for no other reason than that it hasn’t yet developed the underlying policy.”

I ask the Minister to attempt to justify these overextended executive powers or, otherwise, to narrow the powers granted and recognise the importance of parliamentary scrutiny and the principle of parliamentary sovereignty. I beg to move.

[Lord Berkeley (Lab)]

My Lords, I put my name to Amendment 18 in the name of the noble Lord, Lord Wallace of Saltaire. I support everything he said. I am worried about the powers that the Government want to keep for themselves. I apologise to the Committee for not being here earlier; I was having a discussion with Ministers on the future railway structure, on which I believe there will be legislation this autumn. To some extent, that pre-empts what is covered by Amendment 18, which is to do with public passenger transport services. It is not just about trains; it includes buses and probably many other things as well.

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[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.

Amendment 18 withdrawn.

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[Baroness Noakes (Con)]

My Lords, Amendment 22 is in a group of rather different amendments, most of which have more meat in them than my amendment. It is a probing amendment to paragraph 4 of Schedule 3, which contains a provision to ensure that contracts are not fragmented in order to escape the value limits that govern some of the procurement rules. The basic rule in paragraph 4 is that the contracting authority has to add up the value of all the contracts if they could reasonably have been supplied under one contract.

However, paragraph 4(2) allows the contracting authority not to do this if it has “good reasons”. Amendment 22 proposes to remove this in order to find out exactly what the Government intend to allow contracting authorities to do and to probe why they have not been more specific in the Bill. At first sight, paragraph 4(2) is a massive let-out clause, enabling authorities to avoid aggregating contracts. I look forward to my noble friend the Minister’s explanation. I beg to move.

[Lord Wallace of Saltaire (LD)]

My Lords, I rise to speak to Amendment 81, which we on these Benches regard as particularly important. It would put in the Bill one of the most important decisions to take before embarking on the procurement of public goods and services: make or buy? That is the subject of an entire chapter in the Government’s own Sourcing Playbook. This key decision process is missing from the Bill. We seek to put it in as an essential part of the pre-procurement process. The choice of delivery models should be based on careful and impartial consideration of the different forms of delivery available for each type of work, supply or service.

Conservatives in Government have sometimes acted as though outsourcing to for-profit companies—often large outsourcing companies that have been labelled “strategic suppliers”—is the only model worth considering. Unless the Minister wishes to argue that The Sourcing Playbook and other recent publications on procurement guidelines are no longer operable, it seems entirely appropriate to put in the Bill that the choice between in-house and outsource should first be considered. Later, we will move other amendments on the delivery model choices between for-profit and not-for-profit provision.

We have carefully followed the Government’s own language in these publications in drafting the amendment. The Minister may argue that we should leave the Bill a skeleton as far as possible to allow Ministers as much flexibility as possible; we have heard him press the case for flexibility already. We argue the case for clarity, accountability and future-proofing. The principles of the procurement process must be in the Bill, not left for later in the policy statements issued by changing Ministers as they pass through the relevant office.

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[Lord Berkeley (Lab)]

My Lords, I support all the amendments in this group, but particularly those tabled by my noble friend Lord Hunt of Kings Heath. In his introduction, he emphasised the importance of rigour, accountability and transparency. I would add advance notice. The Minister who responds may say that it is all in the Treasury Green Book. It probably is, but anybody who has looked at small projects—localism, levelling up, town centres—will know that you have to comply with the Treasury rules, but it is hard to find them, especially for people who do not understand them too easily. My noble friend has put in this amendment and all the other things that go with it. It is really important in a Procurement Bill that people know what to expect and how to do it.

It also needs to be not confidential. I have a couple of examples. The first is an excellent example of the need for a business case. Some noble Lords may know that Cornwall Council was supporting a new stadium for football, rugby and everything else in Truro, which everybody seems to want, and there is private sector involvement. Last week, Cornwall Council decided that it was not going to do this and withdrew from it, saying that there was no proper business case. That was brave, when everybody wants it, but there was no business case. At least it understood what was going on, but that is not the case for an awful lot of other people—I have mentioned the ferry to Scilly before, but will not mention that again—and the other side of it is things such as HS2, where the budget goes up through the roof.

My final question to my noble friend—I know he will do it for Report—and a few other people, concerns how you enforce these things when something goes wrong. That is the biggest problem that we have not solved yet. I look forward to the Minister’s reply.

[Lord Wallace of Saltaire (LD)]

My Lords, I hope the Minister is impressed by the cross-party consensus on a number of things on this issue. At the moment, this is very much a skeleton Bill. The demands to put more in the Bill come from all parts and relate to a number of different clauses. I hope that he will be able to respond outside Committee, between Committee and Report, to consider whether the Government might be able to come back to satisfy some of these requests with appropriate language. As we have already stressed, the language is already there in a number of government publications; it is just not in the Bill. I look forward to his response.

[Lord Coaker (Lab)]

My Lords, here we go. This is an important part of the Bill dealing with process, and some things have been incredibly difficult to understand. Now we get to things that we can feel. We are talking about purchasing, buying and procurement. We are saying that if we are going to do that, we have a real opportunity as a Parliament—and the Government have a real opportunity, to be fair, but it is going to be driven by some of the amendments here—to use procurement to produce the country and society that we want. Many Governments and local authorities have failed to use the power of that purchasing to drive social change. That is what these amendments are about. I think it is sometimes important to set the context for the various amendments here. I suspect that to an extent there will be a bit of a clash on that because, to be honest, some of us take a position that the free market should be interfered with more than it is. Others take the view that the free market will sort these things out because it will. That is a view, and I think there will be a clash.

Some of these amendments should be in the Bill. The Government will say what they are seeking to achieve. The amendments in this group on the pre-procurement phase are to legislate to enforce it and to make it a reality rather than an aspiration—something that we think would be a good thing to happen. I wanted to say that. I shall wax lyrical at different times to set the context of amendments because otherwise they get lost. Many of the points that have been made on amendments are very important. If I were the Government, I would make more of them. To be frank, the Government may need a bit of advice at the moment. I would not be the person to give it to them, but if I were doing that I would make more of it as a Government, saying that this is what the Government are seeking to achieve, and they will be driven by people in this Committee, and no doubt elsewhere, to go further.

I have a couple of things specifically on the amendments. The noble Baroness, Lady Noakes, will be pleased because this is about a word—I warned them. In Clause 14, which is about the pre-procurement phase, the word “may” is used on a number of occasions. We are discussing what should be in planned procurement notices, which is Clause 14, what should be in preliminary market engagement, which is Clause 15, and what should be in preliminary market engagement notices, which is Clause 16. Those clauses do not insist that the notices are published but say that they “may” be published. Why not have “will” or “must”? The word “must” is used in other clauses in this part, so somewhere along the line, whoever drafted the Bill said, “We will have ‘must’, but in these clauses, we will have ‘may.’” I am always told that this does not make any difference and that the intention is to do that, but why leave it to chance when many of the amendments in this group, ably spoken to by different members of the Committee, are dependent upon a planned procurement notice being published, a preliminary market engagement taking place or a preliminary market engagement notice being published? The amendment could be passed, but it would not make any difference because it only “may” be done, not “must” be done. I hope that is as conflated and convoluted as I get and that the Committee takes the point. I think it would be helpful to the Committee to understand why the word “may” is used in certain clauses and not “must”.

All sorts of really good amendments in this group have been presented to us. I want to make a couple of points about them. My noble friend Lord Hunt, the noble Lord, Lord Aberdare, and the noble Baroness, Lady Boycott, made a point about the role of charities and small businesses, as did the noble Lord, Lord Lansley. Everybody agrees that we have to do more to help small businesses, that we cannot let the big players dominate, that we have to get new entrants and to support them, and asks why we cannot grow business in this area and do more about young people trying to start something. Here is the opportunity. Here is the chance to use procurement to drive the sort of change and make the social difference that we want it to make. The noble Lord, Lord Lansley, is absolutely right that we should use procurement to do it. Other noble Lords who have spoken have made the same point, so it goes all the way through.

The noble Lord, Lord Wallace, is absolutely right about the delivery model for outsourcing that he talked about. One of the disgraces of the last 20 or 30 years is the way in which some things have been forced to be outsourced. I am not an ideological puritan about this; I understand that sometimes it might be the right thing to do—I have got in trouble with my own party for saying that. It is the compulsion to do it that is the problem; where it defies common sense, that is the problem. In those circumstances, the noble Lord, Lord Wallace, and those who support him are quite right to address that.

I was also particularly pleased with the noble Lord’s proposed new subsection (1)(c) in Amendment 81, which I thought he might have emphasised. It talks about outsourcing being able to be brought back in where it is not delivering what it said it was going to deliver. That has been the plague of many things: when something is outsourced and it seems that it is impossible to do anything about it. That is what the amendment seeks to do—another noble Lord in the debate made the point about what you do in those circumstances.

I will just say quickly that I support what the noble Baronesses, Lady Worthington, Lady Verma, Lady Boycott and Lady Parminter, and other noble Lords said on climate change and environmental protection. We need to wake up to this. People say that people are not interested in politics, but they are interested in climate change and environmental degradation, and they cannot understand why something is not being done—why billions of pounds are not used to drive change. This is a real opportunity to do that, and I hope that the Government will take it. No doubt the Government will say that they have all sorts of policies around climate change—Acts, regulations and other things—and that of course they support tackling it. Who does not support trying to do something about climate change and environmental degradation? Everyone supports it. But sometimes the actual will is not there to deliver it through practical policy which will make a real difference. That is the point of the amendment before us.

Lastly, on my noble friend Lord Hunt’s point about disability, I cannot remember the figure from the RNIB briefing—I had a quick look but I cannot remember what it was—but millions of people were potentially impacted.

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I understand all the points that are being made in this debate, fundamentally important points in relation to accessibility, disability, environmental concerns, small businesses and so on. I understand the aspirations of noble Lords to see these objectives going forward. As the noble Lord himself said, this is done through the broad construct of the legislation that a Government that has been formed can put before the country. It does not have to be, and I would submit it should not be in many of these cases, put through a procurement Bill that is designed to enable. We heard a great plea, which I support, to enable SMEs and charities to come forward. If we make this Bill too complicated, and encrust it too much, as some noble Lords are asking, that will work against the very objectives that some others in the Committee have been asking for. So, there is a philosophical difference: the Government wish to have a flexible and lasting framework, and we hope one that is more simple.

[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.