Procurement Bill [Lords]

Mark Francois Excerpts

2nd reading
Monday 9th January 2023 Commons Chamber

[Angela Rayner]

I will come to chapter 3, which addresses transparency—although, again, I think it is unambitious. Look at what Ukraine does in terms of transparency; it is streets ahead. These are baby steps and are nowhere near enough. The hon. Member needs to look at the situation and at the Bill. It is not ambitious enough for the UK and does not prevent situations in which billions of pounds of taxpayers’ money is wasted, as we have seen under this Conservative Government. The only fast-track lane that Labour would allow would be one for local businesses and enterprises that create wealth in our communities and contribute to a fairer society. The VIP lanes under a Labour Government would be for local businesses bringing innovation and wealth to their neighbourhoods, so social value would be a mandatory part of procurement. I hope that the Minister will look at that.

The Bill also misses a crucial opportunity to introduce real and workable non-performance claw-back clauses to contract design. There are ways of baking such clauses into contracts so that failing providers must return taxpayers’ money above a certain threshold. The current system just is not working; eye-watering waste continues without consequence. Being granted taxpayers’ money is a privilege. When suppliers do not deliver—just as we saw with PPE Medpro—we want our money back, but under the current proposals there is no way of even checking a provider’s past performance. Again and again, local authorities fall foul of the same failed providers as their neighbours.

Can the Minister explain why he is not using the Bill to make past performance a central pillar of our procurement? When I go to a restaurant, I can see past customers’ reviews of the food. Should the same not apply to multimillion-pound Government contracts? The Green Paper mentioned a procurement unit, but that has since been removed and replaced with a vague concept of “procurement investigations”. That toothless proposal will do nothing to crack down on waste or protect taxpayers’ money. By contrast, Labour’s office for value for money, which would be advised by a social value council, would have real teeth to ensure that taxpayers’ money is spent responsibly with regular checks. I hope that the Minister will work with me to strengthen that aspect of the Bill.

I have mentioned chapter 3 of the Bill, which I think is another sticking-plaster solution that misses the opportunity to create real transparency in public procurement. Although I welcome the limited measures the Bill takes to move towards transparency—by obligating authorities to issue a transparency notice before awarding a contract, for example, which the Minister mentioned—those are baby steps that barely scratch the surface of what is required. We must see end-to-end transparency, which means the creation of a public dashboard for Government contracts.

Clause 95 gives an unnamed authority the power to make rules about what procurement information can be shared and through which channels. That is symbolic of the poverty of ambition on display from the Government. The Minister could have used this opportunity to announce a system inspired by Ukraine’s anti-corruption blueprint, a dashboard that guarantees transparency in how taxpayers’ money is spent and bakes trust and integrity into the system. Even under attack from Russia, Ukraine is honest about how it spends public money. What is this Government’s excuse?

[Mr Mark Francois (Rayleigh and Wickford) (Con)]

The right hon. Lady may not be aware, but the Infrastructure and Projects Authority audits all major infrastructure projects across the whole of Government every year and grades them on a dashboard system, so we already have one.

[Angela Rayner]

I say to the right hon. Member that we do not have a system that works. That is pretty clear to me because we can see the disastrous waste that currently happens in the system, and because companies that should be rewarded with contracts are not, while others get around the system.

I think we should go further still by finally shedding light on the amount of taxpayers’ money being shelled out to tax havens. Labour will push for the Bill to introduce full transparency about whether suppliers pay UK taxes, as well as public country-by-country reporting by multinational corporations. A Labour Government would go further by using public procurement to drive up standards of responsible tax, including by asking big corporations and businesses publicly to shun avoidance and artificial presence in tax havens.

Transparency is not just a nice thing to have; it actually saves money. A lack of transparency in the procurement system reduces competition and increases costs, leaving the taxpayer to shoulder the burden, so the adoption of open transparent contracting makes good financial sense. It leads to a more competitive procurement process and, ultimately, to cost savings.

As I said earlier, being granted public money is a privilege, and suppliers should in turn uphold the highest standards in the workplace. The Bill is an opportunity to drive up standards across the economy and ensure that public procurement is used as a means to promote decent work throughout supply chains and to reward businesses that treat their workers right. We must back the workers and the employers who create Britain’s wealth by using procurement to raise the floor on working conditions for all. I hope that the Minister will engage openly in Committee with proposals to include good work and the promotion of quality employment as strategic priorities.

That brings me to outsourcing. This Government have become too dependent on handing away our public services on the cheap, and we are all paying the price. It is ideological and not based on sound service delivery. The Bill presents an opportunity to introduce measures to end the knee-jerk outsourcing trend and to ensure that, before any service is contracted out, public bodies consider whether work could not be better done in house. When I worked in local government, we coined the phrase “not outsourcing but rightsourcing”. That is what a Procurement Bill should facilitate.

The pandemic showed us that a decade of Tory Government had shattered the resilience of British businesses and services and of our local economies. Instead of handing out billions to British firms to deliver services, jobs and a better future, big contracts were given to Tory cronies and unqualified providers. The Tories eroded standards at work, encouraging a race to the bottom.

But it does not have to be this way. From the Welsh Government and London’s Labour Mayor to local governments in Manchester, Southwark and Preston, Labour in power is showing that things can be done better. What we need is a public procurement policy that the public can trust and that will make winning contracts a force for our country’s good. Not more sticking-plaster solutions but a Bill that will restore trust in the way public money is spent.

--- Later in debate ---

[Mr Mark Francois (Rayleigh and Wickford) (Con)]

As a former Defence Minister, I will confine my remarks to the Defence-related aspects of procurement, which feature multiple times in the Bill, particularly in parts 1, 2 and 4. The United Kingdom’s system of Defence procurement is broken. That is the considered opinion of the all-party Public Accounts Committee, on which I now serve, which concluded in its 2021 report, “Improving the performance of major defence equipment contracts”, that,

“The Department’s system for delivering major equipment capabilities is broken and is repeatedly wasting taxpayers’ money.”

The Government’s auditor, the Infrastructure and Projects Authority, audits all major infrastructure programmes from HS2 downwards. It produces its findings each summer, in which it grades each project on a traffic light or dashboard system. The definition of a red project is that,

“Successful delivery of the project appears to be unachievable.”

Amber projects are those where,

“Successful delivery appears feasible but significant issues already exist”.

In its latest report of July 2022, the IPA audited 52 of the largest MOD procurement programmes from Dreadnought downwards, which total more than £80 billion of British taxpayers’ money. Of those, nine projects were rated red or unachievable, 33 were amber where significant issues already exist, seven were classified on national security grounds, and only three were rated green, whereby,

“Successful delivery of the project on time, budget and quality appears highly likely”.

I submit to the House that a system where barely 6% of our new major Defence programmes are judged to be confidently on track is indeed a truly abysmal record and fully in keeping with the PAC’s verdict of a “broken” system.

In a similar vein, in March 2021, the Defence Committee published a hard-hitting report, “Obsolescent and outgunned”, which highlighted that in two decades, the British Army has not successfully introduced a single new major armoured fighting vehicle into service. As it powerfully concluded:

“This report reveals a woeful story of bureaucratic procrastination, military indecision, financial mismanagement and general ineptitude, which have continually bedevilled attempts to properly re-equip the British Army over the last two decades.”

The biggest scandal in this sorry tale is that of the General Dynamics Ajax armoured reconnaissance vehicle which, after 10 years and the expenditure of over £4 billion of UK taxpayers’ money, has still not resulted in a single new vehicle entering frontline service, for which the MOD is even now unable to provide a definitive date. Even if it could, the future communication system on which the highly digitised Ajax would rely, called Morpheus, is still many more years from entering service. The lead contractor on the Morpheus evolve to open project is General Dynamics, the same prime contractor as for Ajax. Last year, the Defence Secretary commissioned Clive Sheldon KC to conduct an independent inquiry into the flow of information surrounding Ajax, including to Ministers, which is due to report very shortly. I suspect it may well prove uncomfortable reading for some of those who were working on the Ajax programme.

To take another example of a red programme, it has taken nearly seven years to integrate an airborne early warning radar into a Merlin helicopter to provide air defence coverage for our aircraft carriers—a project called Crowsnest. In stark contrast, during the 1982 Falklands war, we integrated an earlier version of the same radar into a Sea King helicopter in just over three months. This is just one more example of how ponderous, bureaucratic and inefficient our procurement system has now become.

One associated area that is also desperately in need of reform is the procurement of the maintenance of accommodation for service personnel and their families. The future defence infrastructure services—FDIS—contract, which went live earlier this year, is an utter shambles. Complaints about mould, lack of heating and multiple contractor visits, which still failed to carry out basic repairs, such as fixing broken boilers, have appeared in numerous media outlets in recent months. We cannot carry on like this. Our service personnel and their families deserve better. I understand that Defence Ministers may now genuinely be considering terminating the FDIS contract and seeking alternative arrangements. I co-authored a report for a previous Prime Minister on military retention—entitled “Stick or Twist?”—three years ago, in which we suggested establishing a bespoke housing association instead. Whatever solution Ministers now finally adopt, I earnestly hope they will stop reinforcing failure via FDIS and opt for something successful instead.

In summary, the Public Accounts Committee was right: our system of defence procurement is broken, and it is going to take much more than this Bill to fix it. With a war under way in Ukraine and the Government’s integrated review being updated as a result, there is now an opportunity to put right these weaknesses in our defence procurement process, which are deep-seated and have taken place, it must be said, under Governments of both colours for many years. We certainly need to increase our defence spending, but we also need to spend what we allocate for defence much more efficiently as well. This system is crying out for an extremely thorough analysis to be subsequently followed by dynamic reform. We cannot let this go on much longer. Our national security depends on it, and if hon. Members do not believe me, then perhaps ask a Ukrainian instead.

[Mr Speaker]

We now come to a maiden speech. I call Samantha Dixon.