Procurement Bill [Lords]

Nigel Mills Excerpts

Report stage
Tuesday 13th June 2023 Commons Chamber

[Sarah Olney (Richmond Park) (LD)]

The Liberal Democrats support the provisions in the Bill that will speed up and simplify procurement, and create greater opportunities for new entrants, such as small businesses, to access public contracts. However, we have concerns about those areas of the Bill that create opportunities for circumventing the rules that govern the procurement regime. The Government’s shambolic procurement of personal protective equipment during the pandemic exposed the weaknesses in our procurement system, and showed what can happen when Ministers are awarded too much power, and face too little scrutiny. It is vital that safeguards are in place to ensure that billions of pounds of taxpayers’ money does not go to waste.

Amendment 1, which is in my name, seeks to prevent the use of VIP lanes in the procurement of public contracts. The bypassing of the usual procurement rules via VIP lanes during the pandemic saw £3.8 billion of taxpayer funds handed over to 51 suppliers, many of whom were closely tied to Conservative Ministers and their friends. We all know of the scandals that emerged off the back of those contracts; they included reports of excessive profits and conflicts of interest. The Public Accounts Committee, of which I am proudly a member, has, under the chairmanship of the hon. Member for Hackney South and Shoreditch (Dame Meg Hillier), carried out an inquiry on the management of PPE contracts. We found that at no stage was any consideration given to potential conflicts of interest between individuals making referrals through the VIP lane and the companies that they were referring.

The Prime Minister said that he was “absolutely shocked” to read of the allegations against Baroness Mone, but future scandals will not be a shock unless the Government take action to ensure that our public procurement regime cannot be exploited, and prevent Ministers from giving special treatment to their friends without proper scrutiny. Transparency of procurement decisions is paramount. I therefore urge the Government to accept amendment 1, ban VIP lanes and crack down on future cronyism and sleaze.

New clause 9 would ensure that the national health service complied with the public procurement rules set out in the Bill—I would like to press it to a Division this afternoon. Liberal Democrats in the Lords successfully amended the Bill to bring the NHS into its scope, so I am extremely disappointed that the Government have overturned the Lords amendment and are reinstating a huge carve-out for the NHS. Without new clause 9, the Secretary of State for Health will be able to make up their own rules for huge swathes of NHS procurement via secondary legislation. Handing over such a wide-ranging power to the Secretary of State without ensuring proper scrutiny is not the hallmark of a Government who wish to govern with integrity and transparency.

The Government argue that the procurement rules are important for all procurement decisions, so it is unclear why they believe that the NHS, which has a procurement spend of many billions of pounds, should fall outside the new regime. Surely it is essential that the largest public organisation in the country follow the same procurement rules as all other organisations. I therefore urge the Government to accept the new clause, and support the Liberal Democrats in ensuring that NHS procurement represents value for the taxpayer and is subject to proper scrutiny.

To conclude, the Liberal Democrats support efforts to reform our procurement regime, and to introduce new rules to increase transparency and create opportunities for small businesses, but there is too much room in the Bill for the rules to be circumvented. The Prime Minister’s pledge to act with integrity and professionalism risks becoming an empty promise unless the Government take action to prevent the use of VIP lanes. Further, it would be ludicrous for NHS spending to be left outside the regime that governs all other public bodies. Public procurement is the largest area of public spending, totalling approximately £300 billion a year. It is vital that the taxpayer has confidence that the Government are taking due care, and confidence that money is spent in accordance with fundamental principles of transparency and fairness.

[Nigel Mills (Amber Valley) (Con)]

It is a pleasure to follow the hon. Member for Richmond Park (Sarah Olney). I rise to speak to amendments 61 to 67, which stand in the name of the right hon. Member for Barking (Dame Margaret Hodge)—sadly, she cannot be here today, so Members are stuck with me. I cannot do an impression of the energy she would have brought to this debate, but I can try to present the arguments that I think she would have made.

What we are trying to do with these amendments is strengthen the provisions in the Bill to help tackle economic crime. One would think, quite logically, that in a Bill on public sector procurement, the risks of economic crime would be quite a significant issue that we would be trying to deal with. I think it is quite right that we use the Bill to tackle issues of national security or modern-day slavery, but equally, I think it is wrong that we do not have the full protections we need for economic crime in the UK.

This is not just a theoretical problem. In a survey from about five years ago, about a quarter of councils said that they had been victims of corruption in their procurement processes. We estimate that the losses are around £876 million a year—the biggest cause of financial loss in local government—so there is clearly plenty of scope for improvement in our performance. We welcome the fact that under the new UK procurement regime, we have an exclusion and debarring regime that is much better, probably much tougher, and hopefully much easier to use. Those provisions do exist in the EU procurement regime, but they have been extraordinarily rarely used in the UK. I think we all hope that we will be much more effective at using the protections that we are putting in place through the Bill.

[Mary Robinson]

Exclusion and debarment could be a very effective way to incentivise good governance within suppliers, but also to enable local authorities to crack down on and get rid of corruption and fraud in procurement. Indeed, the United States goes a lot further to protect procurement by encouraging whistleblowers to come forward with information through the False Claims Act. In doing so, the US has recovered about £50 billion in respect of fraud in Government procurement and spending. Does my hon. Friend agree that a stronger whistleblowing framework and anonymous whistleblowing, perhaps through a hotline for procurement, could potentially save taxpayers millions of pounds?

[Nigel Mills]

I agree with my hon. Friend and commend her for the considerable amount of work she has done on whistleblowing—she truly is an expert. In general, the Americans have some good ideas on this. I was at a briefing last week where someone took me through those powers: if someone brings a private prosecution and the Government take it on halfway through, that person gets to keep 20% of the proceeds that are recovered, and if the Government do not take it on and that person is successful, they get to keep 40%. That creates a real incentive in the system for someone to take the huge risk to their personal wellbeing and career of exposing wrongdoing. I think we could learn a very great deal from the American position in that respect.

The amendments I want to speak to can be covered in three different groups. Amendment 67 would give contracting authorities the power to exclude suppliers when they have evidence of economic crime-related wrongdoing, not just a conviction for it. The Bill contains various measures by which authorities that are going through a procurement exercise do not actually have to see convictions—they can see credible evidence. We have ended up in the rather bizarre situation where I can exclude somebody from a procurement if I believe they have been part of a cartel in South America even though they have not been convicted, but I think they might well have been if they were in the UK; however, I cannot exclude somebody who I have real evidence has been committing economic crime in the UK, because there has not been a conviction for it yet.

The problem with that model is that convictions for crimes such as fraud have fallen by about two thirds in the past decade. We have not had a successful prosecution of a large corporate for fraud for a decade, I think, although we have had some deferred prosecution agreements. If we are relying on excluding dodgy companies from the process only where there has been a conviction, we are going to end up in the rather unfortunate position of there not being enough convictions to make the regime successful.

To me, it seems quite reasonable to allow an extension of the more wide-ranging rules in the Bill to apply to an authority that has credible evidence that an economic crime has been committed, especially if that prosecution process is ongoing when that authority is doing the procurement exercise, instead of it not being able to exclude that party from the exercise even though there is a real chance that they could be convicted quite soon. I just think that situation would be a real weakness. I am not saying that we would mandate exclusion in that situation, but empowering authorities to not go ahead with that party or bidder when they have credible evidence seems like quite a reasonable thing to do.

When this issue was raised in the House of Lords, the Government’s response was that it would impose an unreasonable burden on contracting authorities, but as I have just said, the Bill already imposes quite significant potential burdens to try to work out if somebody has been guilty of cartel-like behaviour. I suspect that would be harder than working out whether they have been guilty of actual fraud in the UK. We have the new unit being created that could support authorities in that process. That would not be mandatory. It would be an option that they could use in situations where they have that evidence, so there would not necessarily be any burden at all. I urge the Minister to give real consideration to whether a system that only allows successful prosecution of excluded companies that behave terribly in these areas of crime is the right balance to strike.