Public Procurement

Michael Dugher Excerpts

Tuesday 6th March 2012 Commons Chamber

[Michael Dugher (Barnsley East) (Lab)]

I begin my brief remarks by joining the Minister in thanking members of the European Scrutiny Committee for their thorough work in producing the draft reasoned opinion. As the Minister said, the report concentrates on two key areas: the Commission’s apparent failure to adhere to proper processes and the question of infringement of the principles of subsidiarity. On both those issues, Labour Members are in general agreement with the European Scrutiny Committee’s conclusions.

First, we share the concern that the draft directives in question fail to comply with the Commission’s procedural obligations. In an apparent breach of article 2 of protocol No. 2, the Commission neither consulted member states properly on the possibility of setting up a single national oversight body to monitor procurement nor carried out the required “detailed statement” assessing the implications.

Secondly, on the substance of the directives, we are particularly concerned by the proposal that would require the UK to allow the introduction of a single oversight body with the power to “seize” jurisdiction from British courts. As the Committee makes clear, that proposal would force the UK to combine non-judicial and judicial responsibilities within the same organisation. Crucially, the proposal could be seen as breaching the principle of subsidiarity due to it requiring an administrative body to carry out functions that would normally be dealt with by UK courts. As the Committee states,

“this aspect of the proposal amounts to an unwarranted interference in the domestic legal order of the UK, in which administrative and judicial powers have traditionally been exercised separately.”

In addition, the National Assembly for Wales has said that the proposal to introduce a single oversight body in the UK fails also to have proper regard to the principle of devolution.

The Commission’s draft proposals are simply not the right approach. Indeed, it is our view that they amount to little less than another power grab by the European Commission. As the European Scrutiny Committee has outlined, they will add another layer of bureaucracy.

There is a growing public perception in the UK—one that has been echoed by Members on both sides of the House during the debate—that when it comes to EU procurement rules, the current system does not function fairly. The Commission has to face up to that perception. How the rules are interpreted has been allowed to vary too much from country to country over the years. Too often, it seems like one rule for us and another for other member states. Too often, weaker Ministers, in all Governments, have been rolled over by officials, often at the Treasury, who, at best, have an ambivalent attitude to British industry. They have used EU procurement rules as a basis to make recommendations to Ministers that simply do not do the right thing by the United Kingdom.

[Mr Spellar]

I have always thought that there was precious little to commend Chairman Mao’s misrule in China, but his policy of sending recalcitrant officials back to the countryside for re-education seems to have something to commend it. Would not undertaking a shift in respect of Britain’s manufacturing be salutary for many of our civil servants, who are letting Britain down?

[Michael Dugher]

I thank my right hon. Friend for his intervention: he is not noted for being on the left of any party, so it is refreshing—surprising—that he refers to Chairman Mao, but he is of course right.

I referred to weaker Ministers, but I pay tribute to my right hon. Friend: whether he was a Defence Minister or a Transport Minister, he was assiduous in standing up for British industry and challenging his officials—indeed, challenging other Ministers, whether in this Government or the previous Government—on behalf of the UK taxpayer and British industry.

The strictest and most inflexible approach to EU procurement rules seems to be almost an article of faith for some parts of the system here at home. Officials and Ministers might believe that they are acting like good Europeans, but the truth is that they do not act like other Europeans. Little wonder that the British public remain so sceptical of many of the European institutions.

[Mr Watts]

Is it not worse than that? Even when British civil servants and Ministers have a right not to apply European rules—for example, in defence—on more than one occasion we have seen those same civil servants advising Ministers to buy something that is not created in the UK.

[Michael Dugher]

My hon. Friend makes an excellent point. Defence is a good example—

[Alison Seabeck (Plymouth, Moor View) (Lab)]

rose—

[Michael Dugher]

I shall happily give way to the shadow defence procurement Minister in a moment. We should consider the development of defence industrial policy, which formed the basis of the defence industrial strategy: it was written into the rules that Ministers would have to consider the impact on UK industry and UK exports as part of the criteria by which they made decisions. I thought that was an enormously important improvement, and it is a great pity that the Government are rolling back in that determination.

[Alison Seabeck]

My hon. Friend is absolutely right. We talk of an Anglo-French defence treaty and further co-operation, but I am already picking up from British industry concerns that the French Government are one step ahead of us and are already lining up contracts for small and medium-sized enterprises in France to pre-empt anything that emerges from that. We do lose out. People in industry are deeply concerned that this Government are not fighting for them.

[Michael Dugher]

I thank my hon. Friend for that intervention, which echoes my conversations with industrialists in defence and in other sectors. The attitude—the mindset—that my right hon. Friend the Member for Warley (Mr Spellar) referred to was plain to see when the Government cited EU procurement as justification for not choosing Bombardier for the £1.4 billion Thameslink contract.

Such a decision would have been unthinkable in any other member state, supposedly subject to the same EU procurement rules. Ensuring effective and equal access to public contracts across the single market is important, but, as my right hon. Friend the Leader of the Opposition said today, instead of Ministers standing rather idly by in the Department for Business, Innovation and Skills and other Departments:

“We should be using the power of procurement to support innovation and jobs here”

in the United Kingdom.

Opposition to protectionism is right, but opposition to industrial activism is wrong. Contrary to the apparent direction of travel inside the European Commission, there is an increasingly strong argument that there should be greater application of subsidiarity and flexibility in the EU’s attitude to procurement. It is important to remember, not least from the point of view of public confidence, that in spending UK taxpayers’ money, Governments of all political persuasions should be mindful of the implications for the domestic UK economy and for the people who pay those taxes. That is especially the case in tougher economic times, when the pressure on resources is even greater.

We will no doubt return to the issue in the coming months. Labour Members agree with the European Scrutiny Committee’s overall view that the Commission has failed to show that the proposal to set up a single oversight body produces clear benefits that cannot be achieved at national level. We support the motion, and in so doing we agree that the reasoned opinion should be forwarded to the Presidents of the European institutions.