Public Procurement Processes

Debate between Mick Whitley and Hywel Williams

Wednesday 25th January 2023 Westminster Hall

[Mick Whitley (Birkenhead) (Lab)]

I beg to move,

That this House has considered reform of public procurement processes.

It is a great privilege to serve under your chairmanship, Ms McVey, and I am grateful to Members for participating in this important debate.

The House is considering the Procurement Bill, and I stress that I and my party fully appreciate the need for legislation on the issue. That is why Labour did not oppose the passage of the Government’s Bill on Second Reading. Indeed, I had entertained the hope that the sentiment expressed in the Green Paper that preceded the Bill that social value

“is critical to ensuring the social, economic and environmental benefits are delivered”

would find a place in the Bill itself.

I do not believe that addressing the needs of our communities across the country by embedding a requirement for a measure of social value to be integral to every contract awarded is either unreasonable or beyond our powers. After all, we are talking about public contracts that account for £1 in every £3 of taxpayers’ money spent, totalling £300 billion of public funds every year. That spending should bring direct benefits to the people of this country, not primarily to the corporations that win most contracts, and still less to those in tax havens who utilise loopholes in the law to siphon taxpayers’ money into offshore accounts. However, the Bill does not match the scale or scope of reform to public procurement procedures required to ensure that it addresses the needs of the British people following the UK’s exit from the EU. Nor does it provide guarantees that the danger of corruption will be permanently removed from the process of awarding contracts.

My objective in today’s debate is to highlight the Bill’s shortcomings and to propose ways in which we could achieve a change in legislation that resulted in a public procurement legislative framework that could radically improve our public services, boost our local economies and deliver real benefits and hope for the future to the people of so many of our left-behind towns, such as Birkenhead, the constituency I am privileged to represent. Moreover, through root-and-branch reform of the process, we could ensure that the strides we need to take towards our net zero target were quicker and longer.

Let me begin with an issue close to my heart. The Mersey ferries are an iconic and world-famous symbol of Merseyside. After years of transporting tourists and commuters alike across the river, they need renewing. The Mayor of the Liverpool city region, Steve Rotheram, won a grant for one to be replaced and the other refurbished. That is to be warmly welcomed, and I am as grateful as Steve was for the opportunity to retain and refresh such an important and historic transport system, but what happened next goes to the heart of the public procurement process. Unfortunately, it is not addressed by the Bill.

Birkenhead is a shipbuilding town and home to the world-famous Cammell Laird shipyard. In any rational world, it would make perfect sense to build and refurbish the ferries in the shipyard that sits on the river they will be sailing on. Sadly, neither the existing procurement rules nor those proposed in the Bill provide us with the means to ensure that such a rational decision is the one that gets made. The reason for that is simple: there is no provision for vital issues such as the impact on social value, the local economy and the supply chain to be taken into account in the awarding of contracts. Quite the reverse: under the Public Contracts Regulations 2015, the primary consideration in accepting a bid has to be

“getting the right supplier and best tender in accordance with sound commercial practice.”

That so-called sound commercial practice tied the hands of the Mayor of the Liverpool city region regarding the tendering process for the Mersey ferries. The Mayor, the trade unions, Cammell Laird and I, as the local MP, worked hard to find solutions, and eventually a joint venture was agreed between a Dutch shipbuilding firm and Cammell Laird, but under the existing rules the allocation of the work—the amount of work that could be awarded to each site—could not be agreed or decided by the Mayor, despite him being the contracting authority.

[Hywel Williams (Arfon) (PC)]

I am glad the hon. Gentleman is making that point about participation. The Senedd in Cardiff is introducing a Welsh procurement policy under the Social Partnership and Public Procurement (Wales) Bill, which is part of the agenda to involve trade unions and others when delivering public projects with certain objectives. I think he shares that aim, but does he share my concern that the Government’s recent attacks on trade unions and the right to strike could undermine that approach of introducing a broader range of people into the process of public procurement?

[Mick Whitley]

Public procurement is for all, not just the Government or privateers. This is all about social value.

The fact that a vital local employer in Birkenhead, a deprived constituency, was at the mercy of a Dutch company is a very good reason why the public procurement process needs to be reformed. Social value is not an empty phrase. Cammell Laird is the largest employer in my constituency. Birkenhead has an above-average number of benefit claimants, who struggle to survive, so work flowing into Cammell Laird is vital to turn despair and poverty into hope and prosperity, yet the opportunity to create such work was hindered by the legal restrictions surrounding the existing procurement process. That problem is not addressed by the Procurement Bill, because it excludes social value—a key measure of the overall value of any contract.

Value for money has come to mean the cheapest bid, not the best bid. As a result, Cammell Laird and the workers in my constituency suffered a blow. The bulk of the work of the ferries contracts goes through a Dutch company, which I have been told will be keeping its costs low and its profits high by outsourcing work on Mersey Ferries to Romania. That is a glaring example of how public money has not served the public good. I am pleased for the workers of Belfast and Devon that Harland & Wolff and BMT were included in a winning Team Resolute bid, but there is no guarantee of the amount of work they will get as a result of the contract.