Procurement Bill [ Lords ] (Second sitting)

Debate between Mick Whitley and Florence Eshalomi

Committee stage
Tuesday 31st January 2023 Public Bill Committees

[Mick Whitley (Birkenhead) (Lab)]

My hon. Friend is making a good speech. Obviously, we do not see much social value in the Bill. I would go back to a speech that I made in the Chamber a week ago about Mersey ferries. The Liverpool Mayor commissioned a replacement for the iconic but decades-old Mersey ferries, and Cammell Laird, which sits on the River Mersey, was singularly well-suited to build it. It had a reputation for quality and innovation across the sector, and sits right on the banks of the Mersey. Building a new ferry in Cammell Laird would have guaranteed the viability of the site and allowed the yards to make further investments. Not only that, but it would have employed a lot of local people. This is all about social value. Why should it be only companies that benefit? The community should level up, and get the value out of social value.

[Florence Eshalomi]

I thank my hon. Friend for that example of why social value is so important. That contract was a missed opportunity to employ local people. We all want those local benefits, and employment in our constituency, so it is important that contracts be awarded to local companies, as well as the big ones.

Amendment 10 would require public value to be among the procurement objectives. That would complement our amendment on social value; together, the amendments would add real teeth to the Bill, and would give contracting authorities the mandate to make decisions that would benefit not only their area but the whole country. That is important because we spend £3 billion a year on procurement, and although the Bill is a step forward, without clear mandates on social value and public value, contracting authorities may miss out on the chance of creating tremendous value for the public through their procurement processes. Amendment 89 clarifies that by explicitly providing a wider definition of value for money. The Bill does not define value for money, nor does it set out what can or should be considered when an assessment is being made of which is the most advantageous tender.

Legislation allows for wider considerations of value, but the determining factor too often remains the low unit cost. That is problematic because it can lead to services being procured that do not effectively meet needs, and it can drive higher costs in the long term, particularly when it leads to a spiral of support needs. People do not get the support that they need, and their need for support escalates as a result. They are forced to keep going to services that cannot give them the help that they need, or cannot address the root causes of their issues.

Although the Cabinet Office is planning training to be rolled out alongside the legislation to encourage culture change, it is important that the legislation goes as far as possible in encouraging better practice. Further defining value for money is an example of how it could be done.

The aim of amendment 89 is to help to prevent the false economies that arise when we take value for money on a short-term and shallow basis. When we are considering such massive parts of public spending, crossing many levels, it is vital that every penny spent ties together. We do not want a situation where saving a penny in one pot loses a pound from another. By defining value for money in the way that the amendment does, we could ensure that contracting authorities consider the wider impact of their decisions. Again, that could lead to significant efficiency savings for this and future Governments, and to stronger public services for all to enjoy.

New clause 2 would place the procurement principles on the face of the Bill: promoting the public good; value for money; transparency; integrity; fair treatment of suppliers; and non-discrimination. In their December 2020 Green Paper, “Transforming public procurement”, the Government proposed enshrining those principles in law. In responding to the consultation, the Government stated that 92% of 477 respondents agreed with the original desire to put the procurement principles in the Bill, so I was not the only one surprised when the principles were missing from the Bill when it was published in the other place.

Our new clause 2 seeks to accomplish the original aim of the Bill. I know that we will hear from the Minister that we should trust the Government on such issues, and that we should wait for the national procurement policy statement, rather than looking to put things in the Bill. The principles are so important to how we carry out procurement, however, and perhaps the best source for why that is so comes from the Government. In the Green Paper, the Government say of the public good:

“The decision to invest public funds into policies, services, projects and programmes is subject to analysis and appraisal to assess the public good that is expected to accrue as a result of the expenditure. For national spending this will have been conducted in accordance with the HM Treasury Green Book guidance and subject to National Audit Office scrutiny. Procurement should draw a clear link between the objectives, outcomes and anticipated benefits that underpin the investment decision and the selection of contracting parties to deliver those benefits…Public procurement should also be leveraged to support strategic national priorities. Commercial teams should have regard to the Government’s national priorities when conducting public procurement. These will be set out in the National Procurement Policy Statement…This is consistent with international practice where public procurement is regularly leveraged to achieve social and environmental value beyond the primary benefit of the specific goods, services and capital works through operational delivery that contributes additional social value.”

The Green Paper goes on to say of value for money:

“The Government is making clearer the ways in which value for money is assessed at the point of the investment decision, which will be set out in a revised Green Book. A critical element of the assessment is a strong strategic case that sets: a clear objective aligned to government priorities, a rationale for intervention, and/or robust evidence and analysis for how different options for delivering that intervention will advance that objective…The role of procurement is to translate the desired outcomes into the right contracts and select the supplier or suppliers that will deliver these in the way that offers best social value for money. For many procurements there may only be a single contract, but for complex major projects there will be many hundreds of separate contracts of different types, sizes and sectors that need to be packaged and procured in such a way as to deliver the whole project successfully. Whether there is one contract or many it is critical to maintain the ‘golden thread’ from government priorities via the business cases through to procurement specifications and the assessment of price and quality when awarding contracts.

Value for money does not therefore mean simply selecting the lowest price, it means securing the best mix of whole-life quality and effectiveness for the least outlay over the period of use of the goods, works or services bought. Value for money also involves an appropriate allocation of risk and an assessment of the procurement to provide confidence about its probity, suitability, and economic, social and environmental value over its life cycle.” On transparency, the Green Paper states:

“The principle of transparency in public procurement is central to the integrity and accountability of the system and the fight against corruption. This is consistent with best international practice. It ensures business opportunities are accessible and processes and decisions can be monitored and scrutinised. It ensures that decision makers are held accountable for spending public money and helps open up public procurement to more effective competition that in return can deliver better value for money.”

On integrity, it states:

“The principle of integrity is key to strengthening trust and combating corruption. Procurement professionals must always bear in mind the needs of the ‘customer’ or ‘user’. Planning a public procurement must promote good governance, sound management of public money, and a professional relationship between buyer and supplier, e.g. managing conflicts of interest, protecting intellectual property and copyrights, confidential information or other standards of professional behaviour.”

On the fair treatment of suppliers, it states:

“The principle of fair treatment of suppliers means all suppliers must receive fair and reasonable treatment before, during and after the contract award procedure so as to encourage participation by suppliers of all types and sizes. Suppliers should have timely access to review mechanisms to ensure the overall fairness of the procurement process.”

And on non-discrimination, the Green Paper states:

“The principle of non-discrimination applies to procurement under the new regulations and means contracting authorities cannot show favouritism among domestic suppliers. This principle also applies to suppliers who have rights under an international trade agreement that covers the procurement. Non-discrimination in this context means that suppliers, goods and services from any other party to the agreement are given no less favourable treatment than domestic suppliers, goods and services.”

Thank you, Mr Efford, for indulging me; I felt it was really important to outline the very same principles that the Government put in the Bill, but on which they have now reneged. I do not think anyone in this room would disagree with those principles, but the treatment of the procurement principles during the lifetime of the Bill shows why we are keen to make sure we get this down in legislation. We cannot rely on just words and expect to trust the Government when they have already changed their mind on the Bill so much.

Delegating so much responsibility to regulations and statements risks taking the Bill further away from its original intentions, and I do not think that even the Minister wants that. I hope he has listened to those key statements, as outlined by his Government. I urge him to live up to the pledges in the Green Paper, which were supported in the other place, and to support our amendment.