Interserve

Oliver Dowden Excerpts

Monday 18th March 2019 Commons Chamber

[Christian Matheson (City of Chester) (Lab)]

(Urgent Question): To ask the Minister for the Cabinet Office if he will make a statement on the major Government supplier Interserve entering administration.

[The Parliamentary Secretary, Cabinet Office (Oliver Dowden)]

I have been asked to respond on behalf of my colleague, the Minister for the Cabinet Office and Chancellor of the Duchy of Lancaster.

As I have said repeatedly to the House, the Government are not responsible for decisions taken by companies in the private sector. What the Government are responsible for is the continued delivery of public services, and I assure the House that has happened in this case. Schools continue to be cleaned, roads continue to be repaired and improved, and services in Government buildings continue to run as normal.

I reassure hon. Members that nothing in Interserve’s refinancing will affect the delivery of public services. No staff have lost jobs and no pensions have been affected. The company has executed a contingency plan that it had prudently developed in case shareholders rejected the proposed refinancing deal. This was a pre-agreed transaction, known as a “pre-pack” administration. Hundreds of pre-pack administrations are performed every year, including by well-known companies. It is a well-established and normal process, typically used when a shareholder is blocking a business’s restructuring.

To be clear, the operating companies responsible for the delivery of all Interserve’s services, public and private, have remained wholly unaffected. As a result of shareholders failing to reach agreement on the proposed refinancing, the parent company—Interserve plc—was put into administration. The operating companies, the companies that actually deliver the services, were then almost immediately purchased by a new company, Interserve Group Ltd.

This new company has been considerably strengthened. It now has a much stronger balance sheet, £110 million of additional cash and a greatly reduced debt burden. It is in taxpayers’ interest to have a well-financed and stable group of suppliers, so this has been a positive outcome for the company’s customers, supply chain and employees.

I am clear on the benefits of outsourcing. Working with the private sector allows us to access expertise and economies of scale that can help us to deliver more innovative public services at better value for the taxpayer. As I have said before, this Government are driven by what works, not by political dogma, and the evidence is clear. Research shows that outsourcing delivers savings of between 20% and 30% compared with bringing services in-house.

However, we recognise there is more we can do to improve how we outsource. We have learned from the collapse of Carillion, and we are implementing changes to our procurement and commercial processes, as the Chancellor of the Duchy of Lancaster and I have set out in several speeches. For example, we have published “The Outsourcing Playbook”, which was developed with industry and outlines a range of measures designed to ensure that outsourcing projects succeed.

We are now asking suppliers of critical contracts to provide detailed information to help to mitigate any risk to service delivery in the rare event of corporate failure. These “living wills” are now being piloted by five strategic suppliers, including Interserve. We are taking action on prompt payment, including excluding suppliers from Government procurement if they cannot demonstrate prompt payment to their supply chain. We are also taking steps on embedding social value in Government procurement, and I launched the consultation last week.

These sensible and prudent steps will help us to ensure that we get procurement right first time, that we identify and remedy financial risks to Government services and that we manage taxpayers’ money in a way that achieves the best value for money. Indeed, the fact we had ongoing engagement with Interserve throughout this process, through our Crown representatives and the Government commercial function, demonstrates the strength of the Government’s approach to managing our strategic suppliers.

Once again, although the corporate structure of Interserve changed on Friday, I reassure all hon. Members that public service delivery remains wholly unchanged. No jobs have been lost, no pensions have been affected and no services have been disrupted.

[Christian Matheson]

Mr Deputy Speaker, would you pass on my thanks to Mr Speaker for granting this urgent question?

The slow-motion car crash that is the Interserve crisis seems finally to have come to a dreadful conclusion. Let us first remember the company’s 45,000 employees and hundreds of small subcontractors living with uncertainty today. In June 2018 the Cabinet Office gave Interserve a red rating, which indicates:

“Significant material concerns for Cabinet Office Commercial Relationships Board to consider High Risk designation.”

That followed profit warnings issued over the previous year. Despite this, Interserve continued to receive public sector contracts worth hundreds of millions of pounds, including from central Government—a situation remarkably similar to the problems with Carillion just over a year ago. According to the GMB union, the largest of those contracts is worth £66.7 million and was awarded by the Foreign and Commonwealth Office in August.

What checks did the Government make to ensure the contracts they were signing were being given to a company capable of delivering them? Can the Minister also confirm reports that his Department drew up secret plans to nationalise some of these contracts—in other words, to take them back in-house—should Interserve fail? Incidentally, we would support such plans in principle. If such plans were drawn up, why did contracts continue to be awarded to a company that Ministers knew was struggling and was possibly unable to fulfil them?

Will Ministers now activate those plans? If not, what steps will the Government take to ensure continuity of services, especially if parts of Interserve’s business are sold off? Among many other things, Interserve builds motorway junctions, provides maintenance on military bases and runs probation services—badly in the last case, even by the Government’s own admission.

Does the Minister agree this company has simply been hoovering up contracts willy-nilly, regardless of expertise and clearly without regard to the financial implications of such a strategy? Does he agree that Ministers have allowed this to happen based on a false economy of impossible contract prices that, as in the case of Carillion, brought down the whole company and much more around it? Does the Minister accept that the Government’s policy of focusing on just a few major contractors owned by big financial institutions has not only squeezed smaller UK businesses from the scene, but driven the risk to an unacceptable level, at great cost to the taxpayer? The Conservatives’ claim that outsourcing provides value for money has again been shown up for the ideological baloney that it really is. Finally, will the Minister confirm that the Government are looking at all major suppliers to ensure that their finances and ability to deliver contracts are watertight? After Carillion, and now Interserve, the public are entitled to ask who is next.

[Oliver Dowden]

I thank the hon. Gentleman for his questions. As he knows, I have great respect for him, but he rather overstates the case in respect of Interserve. Let me go through some of the points he raised. First, he asked whether checks were performed on the company before contracts were awarded. Yes, of course those checks were performed.

Rather than trading rhetoric around, let us look at the facts. Interserve issued a profit warning in September 2017, after which no major central Government contracts were awarded to Interserve until it completed its refinancing in April 2018. Since that refinancing, two such contracts have been awarded: one in August 2018 for facilities management for the Foreign and Commonwealth Office in Europe, where Interserve was the incumbent supplier, so it was essentially a continuation of that service; and secondly, a contract with Highways England was awarded in September 2018 for a £12 million bridge over the A63. Of course, contracts are being awarded across the wider public sector but, in respect of the contracts awarded by central Government and for which Ministers are responsible, those are the major contracts that were awarded in the relevant period.

The hon. Gentleman asked whether we will nationalise the company. The point here—indeed, the point about all the contingency—is that there is no need to invoke the contingency. Contingency is used if a company collapses —if it goes into liquidation—whereas in this case the companies that deliver services for the Government are entirely unaffected. All that has changed is the ownership by the parent company. Indeed, what has changed is that the company has got stronger—it has £100 million more on its balance sheets and fewer debts because of the restructuring—so there is absolutely no need to invoke the contingency preparation.

The hon. Gentleman talked about a few major companies winning Government contracts; let me tell him the figures: more than 5,000 companies bid for and win Government contracts. We have set a demanding target of a third of all business going to small and medium-sized enterprises.

If the hon. Gentleman is worried about contracts going to Interserve, perhaps he should speak to a few of his colleagues. For example, a £10 million contract was awarded to Interserve in June 2018—by Labour-run Southwark Council. Perhaps the hon. Gentleman could have a word with Labour-run Wales, which awarded a contract to Interserve just in December.

I really have to say to the hon. Gentleman that at this time when employers, suppliers and public service workers are seeking calm heads and reassurance, we are absolutely clear that they are completely reassured. I would have thought the hon. Gentleman would have done better.

[Sir Bernard Jenkin (Harwich and North Essex) (Con)]

Does my hon. Friend recall the inquiry and report by the Public Administration and Constitutional Affairs Committee, which I chair, on the collapse of Carillion? We found that in this sector there was a habit of companies taking on far too much risk without sufficient compensation from contractors, and we found over-optimism on the behalf of Government that they could transfer risk at unrealistic prices. Is this not another example of a company that is paying that price? Should we not be more optimistic that the company has been put into a pre-pack administration in a much more responsible fashion, with lenders taking a much more responsible view? Is there not also a lesson that shareholders must accept that this is not a sector that lends itself to high risk and high return? We do not want to trust our public services to such a risky model.

[Oliver Dowden]

I thank my hon. Friend for his question; as a former member of his Committee I know about his considerable expertise in this field. Indeed, the expertise provided by his Committee helped to frame the Government’s response post-Carillion. For example, that is why I launched the outsourcing playbook a couple of weeks ago. It deals with exactly this point, and is a guide to how Departments should allocate risk as between the Government and the private sector.

My hon. Friend is absolutely right about the overall approach that should be taken. I have been clear, as has my right hon. Friend the Chancellor of the Duchy of Lancaster, that outsourcing companies that provide services to the Government should expect reasonable but not excessive rates of return. Through the programme of reforms we have introduced, we are moving towards a new model for outsourcing.

[Tommy Sheppard (Edinburgh East) (SNP)]

The Minister puts a brave face on things and tries to spin well but the truth is that, first with Carillion and now with Interserve, the collapse of these major multinational multi-service companies seriously damages the entire credibility of the Government’s outsourcing procedures and policies. If I understood correctly, he confirmed that contracts were awarded to Interserve last year, after it was known that the company was crippled with debt and facing imminent collapse and restructuring. If that is the case, I seriously suggest that the procedures for the protection of public money in this context are not adequate, and his Department ought to look into revising them.

Will the Minister give an assurance that no further contracts or spending will be lodged with the group that has taken over the Interserve contracts from this day forward? Will he put in place procedures such that any other companies facing imminent collapse are taken off the tender shortlist and contracts are not awarded to them?

We are all mindful of the fact that a no-deal Brexit has not yet been taken off the table. It may still be the case that, in the weeks and months ahead, the Government are scurrying around trying to find private contractors to undertake large amounts of work at short notice. What assurance can the Minister give the House that, if that is the case, the procedures will be more robust than they were in this case, to make sure that public money is protected?

[Oliver Dowden]

I will take as a compliment the hon. Gentleman’s opening remarks saying that I have spun this well. I have not spun it well; I have set out the facts, which are that the situation for the companies delivering the services in question remains wholly unchanged as a result of the change in the parental ownership structure.

The hon. Gentleman asked about the contracts that the Government have awarded, and I have already set out that position. Again, if he thinks it is irresponsible to be awarding contracts to Interserve, I suggest he has a word with his colleagues in Scotland, where Interserve has been winning contracts left, right and centre. In fact, it is even protecting the pandas at Edinburgh zoo through an outsourcing contract. Back in November, the Scottish Government awarded a contract, saying it would

“deliver benefits for the North Ayrshire communities as well as long-distance road users upon completion”.

Who was that contract awarded to? Interserve.

[Mark Pritchard (The Wrekin) (Con)]

Although I do not believe in nationalisation—save for, perhaps, the Brexit process—and although this is not the same as Carillion, I say gently to the Minister that this is a near miss for jobs, investment and the whole credibility of outsourcing. Is this not potentially another case of greedy capitalism—I speak as a Conservative MP—giving capitalism a bad name, rather than considerate capitalism? Will the Minister enlighten the House as to what has happened since Carillion’s collapse and the so-called stress testing, with the unit in the Treasury and the unit in the Cabinet Office, to ensure that this does not happen again? Following on from what the hon. Member for Edinburgh East (Tommy Sheppard) quite rightly said, what else are the Government doing to try to prevent this from happening again?

[Oliver Dowden]

Let me restate this point. My hon. Friend raised the issue of whether this situation was a near miss, as compared with Carillion. The situation with Carillion was very different: it had problems across all its contract base and issues with its management, which are currently being explored. In this case, there is a specific issue in relation to some of the energy for waste contracts, which are being dealt with. The company sought to refinance to strengthen its balance sheet. It failed to do that because of the position taken, some might say, by some greedy capitalists, in respect of some of the hedge funds that owned shares in the company and refused to consent to its restructuring. None the less, it has gone through a pre-pack, and as a result its position has strengthened considerably. It has £100 million more on the balance sheet and it has reduced its debts considerably.

My hon. Friend is right to challenge the Government on what wider lessons we have learned. It is precisely why we engaged in a tremendous exercise of consultation, engagement and reform. For example, we spent more than 1,400 hours gathering evidence and, as a result of that, we have announced extensive changes through the new playbook.

[Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)]

We can get into the weeds, but the big picture is that only a handful of civil servants in the Minister’s Department actually know in detail at any point what might or might not be happening with a company’s balance sheet. Earlier, the Minister talked about local government, but it is not privy to that information. Indeed, the Minister is not privy to that information. Is not the big risk that things can be happening with very little or no real scrutiny? The public is in the dark, the Minister is in the dark, and certainly other public service purchasers are in the dark, and is that not one of the big problems?

[Oliver Dowden]

I take this opportunity to reassure the hon. Lady and the House that I am most certainly not in the dark about the position of our strategic suppliers. Almost every week I meet the senior officials she referred to in order to understand the situations of our strategic suppliers. Moreover, I regularly meet the Crown Representatives who, as she knows, are responsible for managing the strategic suppliers on behalf of the Government.

[Bob Blackman (Harrow East) (Con)]

I thank my hon. Friend for the answers that he is giving. Clearly, there are big advantages both on costs and quality of service provided by outsourcing, but does he not agree that some of these conglomerates that provide a whole spread of different outsourced services are disadvantaging the small and medium-sized enterprises that could otherwise gain these contracts directly? Clearly, with this restructuring, they could miss out. When restructuring happens, someone loses out. Should the Government not now be considering a wider spread of smaller contracts so that SMEs can properly compete against the conglomerates?

[Oliver Dowden]

As ever, my hon. Friend raises a very important point. He is absolutely right that, post-Carillion, we must ensure that we strengthen the supply chain. One of the ways in which we do that is through increased diversity, particularly by enabling small and medium-sized enterprises to bid and win Government contracts. That is why we have reduced complex pre-qualification questionnaires, why we have set a very demanding target of 33% of all contracts going to SMEs and why, in November, I announced proposals to ensure that strategic suppliers who did not pay their subcontractors on time would face exclusion from winning Government contracts.

[Rachel Reeves (Leeds West) (Lab)]

The Minister spoke as though just a couple of bad mistakes were made at Interserve, but the truth is that this company had gross borrowings of £850 million and an operating profit last year of just £93 million, owing to a whole series of bad mistakes. When my Select Committee did our inquiry into the collapse of Carillion, we warned that it was unlikely to be a one-off and that the whole model, the whole system, was broken. As with Carillion before, the vultures are circling this firm, earning tens of millions of pounds. A total of £90 million was paid out in the past 12 months to advisers—EY, now acting as the administrator; Rothschild, which is advising Interserve; and Grant Thornton, which is bringing in money as well. Why not let the hospitals, the schools, the local authorities and others take these contracts back in-house and manage them in-house in future rather than have this failed contracting-out model? Rather than paying out millions of pounds to advisers, this money should be invested instead in the crucial public services on which we all rely.

[Oliver Dowden]

I have a great deal of respect for the hon. Lady and I know that she has considerable expertise in this field. It is precisely for that reason that in reforming the process of outsourcing—the so-called playbook, the decisions that the Government go through in deciding how and whether to outsource—we now consider whether it is better to bring services in-house or to outsource them. There is a lot of evidence to show that outsourcing brings genuine efficiency savings and genuine innovation—the evidence shows that it can be between 20% and 30%. She castigates me for my description of the situation in respect of Interserve. It is very different from Carillion. There is one major problem for Interserve and that is in respect of the energy for waste contracts. I would much rather that Interserve had dealt with that itself and not been forced into a pre-pack administration. Unfortunately, the shareholders did not consent to that, but the net effect of all of this is that the company is strengthened. It has £100 million more in cash and has considerably reduced debt.

[Alex Chalk (Cheltenham) (Con)]

One of the key lessons that emerged from the collapse of Carillion was that small companies that were acting as subcontractors were left dangerously exposed by unethical and over-lengthy payment terms. Can the Minister confirm that no subcontractors, whether in my constituency or elsewhere, have been adversely affected in this case? Will he update the House on what he is doing to ensure that these big companies cannot continue to act unethically in this way, but should play by the rules?

[Oliver Dowden]

As ever, my hon. Friend is absolutely right. First, straight off the bat, I can give suppliers in his constituency that assurance. There is absolutely no change in the status of the credit rights of those suppliers who are providing services, as the operating companies remain unaffected; it is the ownership that has changed. He rightly raises the point about supply chain finance. That is a major issue. I have twice already brought in strategic suppliers and reminded them of the importance of paying their subcontractors on time, and we are backing that up with action. In November, we announced a prompt payment initiative to ensure that, in future, if they fail to pay their suppliers on time, they will be excluded from Government contracts.

[Chris Stephens (Glasgow South West) (SNP)]

I refer to my entry in the Register of Members’ Financial Interests and to my position as chair of the Public and Commercial Services Union parliamentary group. May I correct the Minister on two things? First, the Foreign and Commonwealth Office contract was not renewed in August 2018—that was when the bid was accepted. Can he confirm that the actual renewal date of that contract was December 2018 and can he perhaps explain the four-month delay? Was it because of Interserve’s financial position? Secondly, he said that jobs are protected. Will he therefore explain why the Interserve FCO contract plans to make five employees redundant on Friday and issue them with redundancy notices? I really seek an assurance from the Minister that pay, jobs, pensions and employment terms and conditions are protected for Interserve employees delivering public services?

--- Later in debate ---

[Oliver Dowden]

I thank the hon. Gentleman for both of those questions. Let me deal with each in turn. Interserve will make decisions as to employment and other things on an ongoing basis. Nothing has changed between Friday and now; none of those job changes will be as a result of this change in the corporate structure, as the operating companies are wholly unaffected. Clearly, I cannot, from this Dispatch Box, give commitments on the future employment decisions of a private company going forward, but I can assure him that none of those will arise from this change in the corporate structure. He made a point—a pedantic but an important one—in relation to a contract being accepted. Essentially, that happens when the relevant Department, the Foreign Office, has signed the contract, because, at that point, it is legally obliged to enter into it and deliver on it. There may be a gap between the contract being agreed and it actually being entered into. That is the point at which the assessment is undertaken, which was in August.

[Debbie Abrahams (Oldham East and Saddleworth) (Lab)]

When Carillion collapsed, 30,000 small businesses lost, on average, £141,000. For one business in my constituency, the figure was over £176,000. I appreciate that it is not exactly the same, but may I urge the Minister to look at my Bill for project bank accounts, which would have protected the small businesses that lost that money in Carillion? Project bank accounts would also protect businesses that must be worried about their future in Interserve, and other companies, and would ensure that late payments are prevented.

[Oliver Dowden]

I welcome the hon. Lady’s acknowledgement that this situation is different to Carillion. She rightly raises the point about project bank accounts, and I know that she has been a strong campaigner on that issue. I agree that there is an important role for project bank accounts to play, particularly in the construction supply chain. That is why last year I hosted a roundtable at the Department for Business, Energy and Industrial Strategy with suppliers to understand their experience of project bank accounts and to consider how we can use them more widely across the public sector.

[Laura Smith (Crewe and Nantwich) (Lab)]

Interserve is the second giant probation privateer to collapse in less than a month, despite hundreds of millions of pounds in bail-outs. Will the Minister explain why the Government are planning to repeat the mistakes of the past and re-let probation contracts on an even larger scale? Is it not time to call a halt to the process and bring these services back in-house?

[Oliver Dowden]

The Ministry of Justice, in consultation with the Cabinet Office, the Treasury and others, is looking at the approach to probation contracts. It has already made announcements and will be making further ones. The new playbook sets out the approach that we should take to outsourcing Government contracts, and looks at questions such as the balance of risk, whether a contract would best be provided by the Government or an outsourcer, and the balance between the amount done by the Government and the amount done by the outsourcer. Those exact tests will be applied in the next stage of probation contracts.

[Jamie Stone (Caithness, Sutherland and Easter Ross) (LD)]

Thinking about the defence of our country, Interserve is doing great work for our armed forces in bases such as the Falklands, Ascension Island and elsewhere. As the Minister said, the trouble has largely been caused by the activities of two hedge funds—sheer speculation. What measures or reforms might the Government consider to prevent these activities from getting in the way of our vital national security?

[Oliver Dowden]

I understand the hon. Gentleman’s frustration with the behaviour of some of the hedge funds concerned, and their failure to agree to this refinancing. However, I reassure him that there will be no change to the delivery of any contracts that Interserve carries out, including the ones that he listed. Those services are being delivered in exactly the same way today as they were on Friday; there has been no change in jobs, no changes in pensions and no change in the delivery of those services.

[Emma Hardy (Kingston upon Hull West and Hessle) (Lab)]

Interserve has the contract for the long-awaited bridge across the A63 in my constituency, and Highways England is doing everything it can to ensure that work continues as normal. I am giving the Minister the opportunity to offer me and the people of Hull the reassurances and guarantees that we need, because we will not be very happy if there are any delays to the bridge, after waiting 20 years to have one. Will the Minister offer guarantees that as Interserve goes through administration, there will be no delays to the building of the bridge, no delays to the payment of the people working on the bridge, and no delays to payment of local subcontractors?

[Oliver Dowden]

Once again, I remind the House that that contract was awarded in September 2018 by Highways England. I absolutely assure the hon. Lady that there will be no change in the delivery of these services by Interserve as a result of the change in the corporate structure. Clearly, I cannot guarantee the whole schedule of the building works and so on, but I can 100% assure her that no change will arise as a result of this change in the corporate structure, because the operating company remains completely unaffected; it is just the ownership that has changed.

[Mike Amesbury (Weaver Vale) (Lab)]

I am afraid that some of the Minister’s answers will come back to haunt the Government in the not-too-distant future. Some 45,000 jobs are at stake—£2 billion-worth of public sector contracts. Is it not about time to get the referee on the pitch and bring the contracts in-house?

[Oliver Dowden]

I am acutely conscious of the jobs that are at stake, which is why I welcome this refinancing. It means that there is £100 million extra cash in the company and there are lower debts. I can reassure every one of the employees that their jobs and pensions are not at risk as a result of the restructuring, and neither is the service delivery.

[David Hanson (Delyn) (Lab)]

The community rehabilitation company Working Links collapsed a few weeks ago, and the assessment by the Government through the National Audit Office was that £467 million-worth of additional costs had to be met. Now that eight of the 21 community rehabilitation companies are changing their ownership and management, what assessment has the Minister made of additional costs to the Ministry of Justice for probation CRCs?

[Oliver Dowden]

Once again, I reassure the right hon. Gentleman that there will be no additional costs in respect of those contracts as a result of the corporate restructuring, as the company delivering the contracts remains wholly unchanged.

[Dr David Drew (Stroud) (Lab/Co-op)]

On the back of the collapse of Carillion, I was told by someone who works in the business of two other companies that they would go the same way in due course. They said that the second company to go that way would be Interserve; I will not mention the third. What due diligence did the Government carry out on the implications for other service companies? If it was known in the industry, why was it not known by the Government?

[Oliver Dowden]

As I have said repeatedly from this Dispatch Box, the Government undertake appropriate contingency planning in respect of all our strategic suppliers. We have not had to invoke that contingency with Interserve because the companies delivering those services remain wholly unchanged; no jobs are lost, no pensions are affected and no services are disrupted.

[Jim Shannon (Strangford) (DUP)]

When Carillion went down, lots of jobs were lost and projects were put on hold, and confidence was badly dented. At that time, we were informed that steps were being taken to ensure that the situation would not happen again. Only a matter of months later, Interserve has experienced difficulties, and yet again the general public are losing confidence. It seems that outsourcing has become a gamble. Could the Minister outline steps to restore confidence? Is he satisfied that Interserve’s financial position has been secured, and what discussions have taken place with other companies to check and monitor that no other big companies are facing major financial problems?

--- Later in debate ---

[Oliver Dowden]

As I have said, I would rather that this corporate restructuring had happened in a smoother way. It has happened through a pre-pack process, but as a result, the companies actually delivering the public services are unchanged; it is their ownership that has changed. I reassure the hon. Gentleman that all the contracts currently being delivered by Interserve will continue to be delivered and will be unaffected, because their specific corporate ownership has not changed. Jobs will not be lost as a result and pensions will not be affected. Indeed, the company’s balance sheet is strengthened.

[Chris Stephens]

On a point of order, Mr Deputy Speaker. The Minister has said on two occasions that no Interserve employees would lose their jobs, but there has been an acknowledgement that five redundancy notices will be issued on Friday. I would suggest that those statements are incompatible. Can you advise me on how the Minister can correct the record about jobs being lost, and is there any other way in which Members can lobby the Foreign and Commonwealth Office to ensure that those five employees are not served with a redundancy notice on Friday?

General Election (Leaders’ Debate) Bill

Oliver Dowden Excerpts

Friday 15th March 2019 Commons Chamber

[The Parliamentary Secretary, Cabinet Office (Oliver Dowden)]

May I begin by associating myself with the comments of the hon. Member for Leigh (Jo Platt) about the appalling attack in New Zealand? As my right hon. Friend the Security Minister made clear this morning, the Government show solidarity with the people of New Zealand.

I am grateful to my hon. Friend the most capable Member for Wellingborough (Mr Bone), who spoke most entertainingly in this important debate. I hope that I have repaid the compliment that he paid me in his opening remarks. As he rightly said, this topic has received some attention recently. There was a debate on exactly this topic in Westminster Hall in January. I take a personal interest in the matter: when the first leaders’ debates were being discussed and prepared for, I was working for David Cameron when he was Leader of the Opposition, so I have seen this process all the way through.

As the hon. Member for Ipswich (Sandy Martin) said, televised leaders’ debates are an important campaigning tool, allowing members of the public to access and reflect on the key message of political parties in the comfort of their own home, through their television sets and other devices. They also have broad appeal, reaching members of the public who have traditionally been disengaged from politics, and there is plenty of evidence that members of the public find televised debates informative and engaging.

I am clear that TV debates can be a useful part of the democratic process. The question for this House today, though, is whether they require primary legislation to regulate and mandate them. The Government do not believe, on practical and principled grounds, that there is such a case. Over the coming minutes, I will try to develop that argument a little further, starting with clause 1, which sets out duties for the establishment of a proposed commission.

The Bill provides that the commission would have a statutory duty

“to maximise…the number of viewers of the debates it oversees, and…the wider media coverage of those debates.”

It is an admirable aim to maximise such engagement. However, both these duties are better served in the hands of broadcasters, rather than in the hands of an independent commission. Broadcasters have the incentive, infrastructure and expertise to design and deliver media content that the public wish to consume. As has been acknowledged by many hon. Members, broadcasters have in the past successfully delivered televised debates without the need for legislation, mandation or an independent commission.

My gut instinct—as a Member of this House, a Minister and, indeed, a Conservative—is that one should not seek to regulate unless it is absolutely necessary. In this case, I am not convinced of such a necessity. Particularly when we are dealing with a scenario of potentially infringing the rights and freedom of the press and broadcasters, we must have a very high bar for such regulation in the first place.

Clause 2 sets out a highly prescriptive framework, with various rules for how the debates must be conducted. As my hon. Friend the Member for Wellingborough highlighted, it requires a precise number of debates, mandates leaders’ attendance and requires all political parties to be represented. I fear that this creates a very inflexible framework. The clause is even more prescriptive when it comes to timing, mandating that certain debates have to be held within 19 days of polling day, but it is not quite clear why.

[Mr Bone]

I omitted to point that out in my speech. The reason is that there are effectively two polling days—the day when the postal votes go out, and the day of the general election—so one of the debates would be close to the general election and one would be when the postal votes go out. I am sorry if I did not make that clear.

--- Later in debate ---

[Oliver Dowden]

I thank my hon. Friend for that clarification. None the less, there is a lack of flexibility. For example, if there was a major incident, which we have seen in the past, and it was deemed that it would not be appropriate to hold the debate on such a day and broadcasters wished to move the date, the legislation does not currently provide any such flexibility. Such prescription would also make it harder for broadcasters to determine the precise date on which they would maximise coverage. For example, they may decide that a Sunday would provide more coverage than a Monday evening.

Similarly—this important point was raised by my hon. Friend the Member for Boston and Skegness (Matt Warman)—clause 2 is very prescriptive about the participation of political leaders, and it does not permit them to send someone in their place. My hon. Friend the Member for Wellingborough made a reasonable and good argument for why one might wish to compel the leaders of political parties to attend such a debate, but there are many reasons why it may, for legitimate reasons, not be appropriate. For example, if the leader of the party in question is not represented in this House, we may well wish the leader of the grouping in this House to participate in the debate, since they would be the person who would ultimately become Prime Minister, should they be successful.

Moreover, there is still a considerable problem about the exact sanctions if the legislation is not adhered to. There have been jokes about whether a party leader should be sent to the tower if they fail to turn up, but this is an important question. If the legislation is to have any meaning, it must have a meaningful sanction behind it, and there is no clarity on that.

[Mr Bone]

I am grateful to the Minister for giving way again. The point was that we do not really need to have a sanction, because if the leader of a political party wants to break the law, that usually damages the political party. That is the effective sanction.

[Oliver Dowden]

My hon. Friend makes a good point. None the less, when we are drafting primary legislation, we should have clarity about the sanctions that flow from a breach of laws passed by this House.

There is also the question of the membership and operation of the independent commission. The Bill states that the commission’s operating expenses

“are to be funded by television broadcasters by agreement.”

Failing that, the Secretary of State may impose a levy. My hon. Friend usefully clarified that broadcasters have indicated that they would be willing to pay such a levy, but I remind Members that the exact way in which such a levy is determined and who should pay it is often terribly complicated. For example, the establishment of post-Leveson press regulation was certainly not easily determined. Licensed broadcasters already pay a licence fee to Ofcom, so this would be a further burden on them.

Moreover, televised leaders’ debates are already subject to agreement between broadcasters and political parties. Broadcasters have been known to collaborate between themselves on the format and delivery of televised leaders’ debates. They are well-placed to lead on such decisions, as they have both experience and expertise in broadcasting televised leaders’ debates. Each broadcaster also brings their individual, distinctive approach to such debates, as we have seen in previous leaders’ debates.

In addition, there is a considerable body of evidence on this point. For example, on 13 May 2014, the House of Lords Select Committee on Communications published its findings on broadcasting general election debates, and having looked at whether an independent debates commission should be set up to oversee televised election debates, it found no substantial evidence to support such a proposal. There is similar evidence from Professor Charlie Beckett, of the department of media and communications at the London School of Economics.

I would like to address the point raised in particular by the hon. Member for Lincoln (Karen Lee) about the attitude of the next generation. I think there is a lot of evidence that the next generation is increasingly moving away from conventional broadcast media to consuming news and current affairs in many different forums, such as Facebook and Twitter. For example, a report by Ofcom entitled “News Consumption in the UK: 2018” found that eight in 10, or 82%, of those aged 16 to 24 used the internet for news, compared with just six in 10 who used television. [Interruption.] It seems a little strange to seek to regulate conventional televised leaders’ debates, even if, as the hon. Lady says from a sedentary position, there is an opportunity to stream such things, because there are increasingly other forms of leaders’ debates that do not take place in a television studio—for example, there are mechanisms for having Facebook debates. This Bill seems to be looking backwards, rather than forwards to the future of broadcasting.

In conclusion, while we have heard a number of strong points on this topic, particularly from my hon. Friend the Member for Wellingborough, there are very obvious deficiencies in this Bill. For that reason, the Government do not support it. We continue to believe that this is best determined by broadcasters and political parties, so we will not support this piece of legislation.

[Madam Deputy Speaker (Dame Eleanor Laing)]

The debate has concluded, but I hesitate to put the Question, as the hon. Member for Wellingborough (Mr Bone) has indicated that he wishes to withdraw his Bill. Does he seek leave to withdraw the motion?

Draft Public Procurement (Amendment etc.) (EU Exit) (No. 2) Regulations 2019

Oliver Dowden Excerpts

Thursday 14th March 2019 General Committees

[The Parliamentary Secretary, Cabinet Office (Oliver Dowden)]

I beg to move,

That this Committee has considered the draft Public Procurement (Amendment etc.) (EU Exit) (No. 2) Regulations 2019.

It is a pleasure to serve under your chairmanship, Mr Evans. As hon. Members know, the Government remain committed to securing an agreement on the United Kingdom’s exit from the European Union, but we must be prepared for all outcomes. Notwithstanding the motions passed in the House over the past couple of days, it remains the default position that if nothing is agreed we will be in a no-deal situation. The draft regulations deal with procurement in that context.

The amendments made by this instrument do not amount to a material change in procurement policy. To all intents and purposes, they maintain the status quo for UK contracting authorities with regard to their obligations towards certain non-UK suppliers. They will ensure that the UK’s procurement system continues to function as intended post EU exit in the event of no deal, and grant certainty to UK contracting entities that they can continue after exit day to procure goods and services in the way they do now. In that way, the Government are ensuring that those entities can continue to be able to obtain value for money for UK taxpayers.

As hon. Members may be aware, the UK Government are working to agree continuity agreements with a number of our international trading partners, which will replicate as closely as possible trade arrangements to which the UK is currently a party via its EU membership. We have already laid before Parliament agreements with Switzerland, Israel and Chile, which contain substantial provisions on procurement. Where the UK has entered into an agreement that contains provisions relating to public procurement, we must ensure that our domestic procurement legislation takes account of the obligations in those agreements.

In their current form, the Public Procurement (Amendment etc.) (EU Exit) Regulations 2019, which were approved by this House a couple of weeks ago, on 20 February, would amend the existing procurement regulations to disapply from exit day the duties that UK contracting authorities currently owe towards economic operators from countries with which the EU has a trade agreement containing procurement provisions. The regulation-making powers in clause 2 of the Trade Bill, which is currently before Parliament, would enable the UK to reinstate those duties in such a way as to reflect the UK’s transition continuity agreements, rather than the EU agreements that they replicate to which the UK will no longer be party after exit day. As Committee members are aware, the Trade Bill is yet to complete its parliamentary passage. In consequence of the absence of bespoke implementing powers, we have had to look at other measures that would enable the UK to demonstrate compliance with agreements that we have worked hard to negotiate.

It is the duty of a responsible Government to ensure that, once we have left the EU, we continue to reap the economic benefits that these agreements bring. It is also our duty to uphold our reputation as a valued and respected trading partner by ensuring that the obligations we have committed to maintain after our withdrawal from the EU are adhered to. I am therefore bringing forward this second EU exit instrument, which will amend the first instrument before it comes into force. Instead of removing the procurement regulations—the obligations owed by UK contracting authorities and other entities towards non-UK suppliers—immediately on exit day, the first SI would preserve them for 18 months after exit day. The need for a second amending instrument was, as hon. Members may recall, referred to during the debate on the first EU instrument in a Delegated Legislation Committee on 13 February, which I also led on behalf of the Government.

In practical terms, the preservation of obligations will have the effect of ensuring that for a time-limited period, suppliers from certain non-EU trading partners will be afforded the same guaranteed rights of access to UK procurement markets that they now enjoy. This mirrors a similar provision already contained in the first SI in respect of suppliers from states that are party to the World Trade Organisation government procurement agreement. That provision has already been approved by the House; it is simply being extended to 18 months, to align it with the provisions that we are introducing in respect of bilateral treaties between the EU and third countries.

By keeping alive duties owed by contracting authorities as they exist already, the Government are ensuring that the UK continues to meet its international procurement obligations. In turn, that will help to ensure that UK businesses continue to enjoy access to overseas procurement opportunities, and that UK contracting authorities can continue to obtain the best possible value for money when procuring through robust supplier competition.

Some hon. Members may at this point question whether, when the UK leaves the EU, it is appropriate to maintain existing obligations arising from EU agreements to which we will be no longer a party, and whether doing so will produce an adverse effect on British businesses and authorities. It should be emphasised that the procurement obligations that arise from the UK’s continuity agreements are in essence the same as those that until now have arisen from the EU’s trade agreements, meaning that the amendments in this instrument represent a temporary, technical solution to complying with the UK’s international procurement obligations until such time as the Trade Bill is enacted.

I assure the Committee again that, in practical terms, the provisions in this instrument amount to a time-limited continuation of the status quo that will create no additional burdens or costs for UK businesses or contracting authorities. Contracting authorities across the UK will continue to be able to procure competitive goods and services from overseas, as they do now, and UK businesses will see no change as a result of this instrument in the way they go about bidding for and winning lucrative public contract opportunities, both in the UK and in countries with which the UK has a trade agreement. For that reason, it has not been necessary to publish an official impact assessment.

The instrument will ensure that in the event of no deal, the UK’s procurement system continues to function as intended post Brexit; that the UK can successfully ratify and comply with its international continuity agreements; and that UK suppliers and contracting authorities can continue to operate, as they do now, for the foreseeable future. I therefore commend the regulations to the Committee.

--- Later in debate ---

[Oliver Dowden]

I have great respect for the hon. Member for Leigh, but she somewhat overstates her case in respect of the regulations. They are just about continuity; there is no change for businesses affected and we are not seeking to rewrite the regulations. All we are doing is accepting the reality of the situation, which is that the Trade Bill has not completed its passage through Parliament, so we have to find a way to give effect to our international obligations.

The principal international obligation that we have to give effect to is the GPA, which the hon. Lady characterised as a failure. Most people did not expect us to conclude the GPA before exit day, but we managed to deliver that. It covers almost all the access rights for United Kingdom businesses, so they will be able to access third-country markets through our membership of it. The way in which the Constitutional Reform and Governance Act 2010 works means that the measure has to be laid 30 days before it takes effect, which is why it will take effect shortly after exit day. There will be a very small window in which, in theory, UK companies will not be able to access those third-country markets.

As I said last time we discussed this, access remains the default for most third-country markets, so the Governments and legislatures in those countries would have to actively decide and go to the effort of saying that we could not have guaranteed access in that small window—notwithstanding the fact that they know we will have it by the end of the month. In respect of the small number of countries where the default is that we drop out, the situation would have to be that procurements were commenced and completed in that period, so a vanishingly small number of companies will be affected.

On the hon. Lady’s point about the wider access to markets, of course there are further mutual obligations in respect of the bilateral agreements between the EU and third countries to which we are a party through our membership of the EU. On procurement, however, most do not go much further than the GPA that we have already agreed. We are making good progress in concluding bilateral trade agreements; I have outlined the ones that we have already reached.

The other point to remember is that the default policy in the United Kingdom is completely open access, so we already allow access regardless of whether countries are signatories to the GPA or other bilateral agreements. We will simply be maintaining that. The only thing that will be different is the right to remedies for third countries as they enter the UK market. A company in a third country that accesses the UK market would not have remedies unless they were granted by the UK Government. The draft instrument gives continuity, in that they will continue to be able to get remedies. In all other respects, the situation will remain exactly the same.

The hon. Member for Dunfermline and West Fife raised several points on Scottish procurement. We very much want to increase the proportion of SMEs able to access Government procurements, and we are making good progress. There is a slight difference between Scotland and the UK, in that UK contracts tend to be much larger. For example, in reprocuring Trident, it is highly unlikely—in fact, impossible—that an SME would win the contract.

On whether the draft instrument will take powers away from Scotland, I say to the hon. Gentleman that everything will continue as it was before. As he knows, we have proceeded with consent. Scotland is replicating these provisions. It is a long-standing practice that the Scottish Government regulate procurements in respect of Scotland, and the draft instrument does not change that. I hope that reassures him.

In summary, this is a prudent step to ensure continuity, reflecting the fact that it remains the case that no deal remains the default position unless and until Parliament legislates to change that. A responsible Government have to take steps that take that into account. Again, I commend the draft regulations to the Committee.

Question put and agreed to.

Oral Answers to Questions

Oliver Dowden Excerpts

Wednesday 13th March 2019 Commons Chamber

[Bambos Charalambous (Enfield, Southgate) (Lab)]

2. What recent discussions he has had with trades unions on civil service pay.

[The Parliamentary Secretary, Cabinet Office (Oliver Dowden)]

The Chancellor of the Duchy of Lancaster and I regularly engage with unions on a range of civil service workforce issues, including pay. I most recently met union representatives across the wider public sector last month, and I will meet civil service trade unions on pay for 2019 very shortly.

[Bambos Charalambous]

Since 2010, wages for workers in the civil service have fallen 10% to 13% behind workers in the NHS, local government and the education sector. Despite that, the Cabinet Office has confirmed that any pay rise above 1% will have to come from further cuts in jobs, and in terms and conditions. Is it not time that the Government backed up their claim to be ending austerity by ending it first for their own employees?

[Oliver Dowden]

As the hon. Gentleman acknowledges, we have removed the 1% pay cap, and it is up to each Department to find efficiency savings and better ways of working to pay for greater pay rises. That is exactly what we have seen. For example, the Foreign Office agreed a deal of 4.6% on average over the course of two years, giving a pay rise but funded properly by efficiency savings.

[Sir David Evennett (Bexleyheath and Crayford) (Con)]

Will my hon. Friend say whether in the discussions he has been having he has reflected on how much the national living wage will increase from next month, and how many workers that will benefit?

[Oliver Dowden]

As ever, my right hon. Friend is absolutely correct. In fact, the effect of the national living wage this year is to hand workers a £700 pay rise.

[Chris Stephens (Glasgow South West) (SNP)]

Can the Minister confirm that permanent secretaries agreed a 1% pay offer across the board in Departments last year? Does that not make a mockery of the fact that the Government have 200 separate pay negotiations across the civil service?

[Oliver Dowden]

As the hon. Gentleman is aware, in respect of lower grades—those below the senior civil service—there is a delegated pay process. The overall framework is set by the Cabinet Office and the Treasury, and it is for individual Departments to decide. We will go through the proper process, and no final decisions have been taken.

[James Duddridge (Rochford and Southend East) (Con)]

3. What plans the Government have to encourage more candidates with disabilities to stand for election.

--- Later in debate ---

[Carol Monaghan (Glasgow North West) (SNP)]

6. If he will make it his policy to introduce the real living wage in all Government Departments and to seek accreditation from the Living Wage Foundation.

[The Parliamentary Secretary, Cabinet Office (Oliver Dowden)]

We are addressing this issue through the application of the statutory national minimum wage and the national living wage, based on the advice of the Low Pay Commission. From April, the national living wage will rise again, from £7.83 to £8.21 per hour, handing a full-time worker a further £690 annual pay rise.

[Carol Monaghan]

The real living wage is £9 an hour, and, in terms of paying it, Scotland is already the best performing part of the UK. Over the next three years, the Scottish Government will be lifting more people— 25,000 more people—out of poverty and on to the real living wage. When will the UK Government follow Scotland’s lead in paying the real living wage, not the bogus national living wage?

[Oliver Dowden]

I am sorry to hear the hon. Lady referring to the national living wage as bogus. It is a very proud achievement of this Government and it is actually rising faster this year than the real living wage. Over the past three years, since it was introduced, the national living wage has handed the lowest paid workers a pay rise of almost £3,000.

[Alex Burghart (Brentwood and Ongar) (Con)]

7. What steps his Department is taking to help improve the cyber-security of public and private sector organisations.

[The Parliamentary Secretary, Cabinet Office (Oliver Dowden)]

Our world-leading national cyber-security strategy, supported by £1.9 billion of transformational investment, sets out the steps that we are taking to defend our people, deter our adversaries, and develop the skills and capabilities that we need. Our vision is that, by 2021, the UK is secure and resilient to cyber threats and prosperous and confident in the digital world.

[Alex Burghart]

I was concerned to read that three quarters of FTSE 350 companies are not aware of the risks associated with businesses in their supply chain, particularly with businesses with which they have no contact. What steps are the Government taking to ensure that their own suppliers understand these vulnerabilities?

[Oliver Dowden]

As ever, my hon. Friend is absolutely right to raise this very important issue. Companies must do more to understand their supply-chain risks. Our cyber essentials scheme extends our influence to organisations that provide products and services to Government; it specifies standards that will improve their cyber-security. We use contractual arrangements to ensure that they help those in their supply chains, often small companies, to be more secure.

[Chi Onwurah (Newcastle upon Tyne Central) (Lab)]

Technology can help deliver public services which are better, smarter, more tailored and put people in control, but that requires investment in people, processes and equipment. The 2017 WannaCry attack on the NHS was a consequence of a lack of investment in all three. What is the Minister doing specifically to give local authorities and other public service deliverers the resources and the skills that they need to ensure secure digital public services?

[Oliver Dowden]

The hon. Lady is absolutely right to raise the challenge of cyber-security, but we have responded to that challenge. That is why we have created the National Cyber Security Centre, funded by £1.9 billion of additional money. On the WannaCry incident, we have learned the lessons since that attack and we are, for example, rolling out Windows 10 across the NHS.

[Jo Platt (Leigh) (Lab/Co-op)]

We know that 43% of businesses experience cyber-security breaches each year and, as we have just heard from my hon. Friend the Member for Newcastle upon Tyne Central (Chi Onwurah), we know that half of all local authorities in England still rely on unsupported server software. We know from the Minister himself that the Government have no idea how many cyber-attacks hit Government. Does the Minister accept that we need a new approach? We need to look at how we foster cultural cyber-change and we need to look at how we put the public good rather than private interest back at the heart of Government cyber strategy.

[Oliver Dowden]

The hon. Lady says that we have no idea of the level of attacks. I am happy to set out the number for her. We have already managed more than 1,100 major incidents through the National Cyber Security Centre. The national cyber security strategy is delivering, for example, the removal of more than 4.5 million malicious emails every month, and the taking down of 140,000 fraudulent phishing sites. This strategy is bringing together the commercial side and the Government side and it is delivering.

[Mr Speaker]

We are out of time, but we must hear the question of the right hon. Member for Loughborough (Nicky Morgan).

--- Later in debate ---

[Rosie Cooper (West Lancashire) (Lab)]

T2. On Sunday, the BBC reported that Interserve is likely to go into administration on Friday. What steps is the Minister taking to protect jobs and pensions, should Interserve collapse?

[The Parliamentary Secretary, Cabinet Office (Oliver Dowden)]

As the hon. Lady would expect, we keep under review the situation in relation to all our strategic suppliers. I assure her that we take appropriate contingency measures in respect of every strategic supplier.

[Mrs Pauline Latham (Mid Derbyshire) (Con)]

T5. Can the Minister tell us what discussions he has had with Cabinet colleagues on delivering more public services online?

[Oliver Dowden]

To date, we have already delivered almost 800 services online on gov.uk. In addition, I regularly engage with ministerial colleagues, principally through the digital implementation task force, which is chaired by my right hon. Friend, the Secretary of State for Digital, Culture, Media and Sport.

[Laura Smith (Crewe and Nantwich) (Lab)]

T3. The Government claim that they have lifted the pay cap and declared austerity over, but it seems that this does not apply to their own employees. The lack of consultation on the civil service pay guide is just shameful. When will the Minister make it his policy to return to national pay bargaining?

[Oliver Dowden]

This Government do not support national pay bargaining. It has been a step forward that we tailor pay to the needs of each individual Department. But I engage with all trade unions as we set the overall delegated framework that applies to pay grades below the senior civil service.

[Damien Moore (Southport) (Con)]

T7. I welcome the announcement from the Cabinet Office on reforming the way that Government contracts are awarded so that they consider social impacts. Has my hon. Friend made an assessment of the effect of these changes on social enterprises?

[Oliver Dowden]

My hon. Friend rightly raises the issue of social enterprises. That is why, earlier this week, I made an announcement that we would be consulting on how to allow social enterprises to bid for a range of Government contracts and set out a clear framework for them to do so. I am confident that we will be able to unlock the opportunities of the over 100,000 social enterprises we have in this country.

Draft Public Procurement (Electronic Invoices Etc.) Regulations 2019

Oliver Dowden Excerpts

Thursday 7th March 2019 General Committees

[The Parliamentary Secretary, Cabinet Office (Oliver Dowden)]

I beg to move,

That the Committee has considered the draft Public Procurement (Electronic Invoices etc.) Regulations 2019.

It is a pleasure to serve under your chairmanship, Mr Gapes, in what I hope will be a fairly straightforward statutory instrument for the Committee to consider.

The Government are committed to securing a deal to ensure an orderly withdrawal from the European Union. In that event, we will be required to continue to abide by our commitments under the proposed withdrawal agreement, including the obligation to comply with EU law during the implementation period and to transpose European directives into UK law.

One such directive concerns electronic invoicing in public procurement. The draft regulations are a short and simple measure that aims to promote the uptake of electronic invoicing in public procurement by requiring public bodies to accept electronic invoices from their contracted suppliers. Principally, the draft regulations will transpose the e-invoicing directive, but they also make a number of small and minor technical corrections to public procurement rules.

[Michael Fabricant (Lichfield) (Con)]

This SI seems to make good sense—it is very modern, and this is how we should be doing business anyway. However, in the event of no deal, will we have to pass a different statutory instrument or will this one still apply?

[Oliver Dowden]

I was just coming to that. The draft regulations are due to come into effect after the withdrawal date so, in the event of no deal, we would clearly not be obliged to implement it because we would not be subject to EU law, but we might decide to continue to do so anyway. There are pretty good grounds for that, because it is in essence a simplification measure for businesses. That brings me to a segue.

Significant benefits can be realised by promoting the uptake of standardised electronic invoicing in public procurement, given the reduction in costs and administrative burdens for procuring entities and their suppliers, and given the environmental impact of a move away from paper-based invoicing. That is why in 2014 the EU adopted directive 2014/55 on electronic invoicing.

The draft regulations transpose that directive into domestic law. They do so by amending existing procurement legislation applicable to the award of public contracts and of contracts in the utilities sector. The Scottish Government have brought forward their own legislation to give effect to the directive in similar terms to this instrument. The directive contains one simple obligation for member states: to take necessary measures to require public sector buyers and utilities to receive and process electronic invoices that comply with a common standard.

It is important that I stress from the outset that private sector suppliers, other than those privatised utilities remaining subject to public procurement rules, will not be obliged to use the EU invoicing standard unless they wish to. We are not imposing additional costs on suppliers.

The measures that we are introducing will oblige contracting authorities and other procuring entities to include within their contracts an express term requiring them to accept and process electronic invoices that comply with the standard, where of course there is no dispute as to payment. In the absence of such express electronic invoicing provisions in the contract, a term to that effect would be implied—if they do not put it in, this statutory instrument will imply that term. Suppliers will be able to enforce their ability to invoice purchasers for goods and services electronically via the terms of the contract.

The European Committee for Standardisation was commissioned to draft the standard, and the British Standards Institution was involved in its development. The standard was published in October 2017, following which the UK had 18 months to implement the directive’s requirements. The deadline for that implementation is 18 April 2019. As I discussed with my hon. Friend the Member for Lichfield, it will not escape the attention of the Committee that that falls after the date on which the UK is anticipated to leave the European Union. However, the Government’s aspiration or intention remains that the UK will secure a deal with the European Union. Under the withdrawal agreement, we would then enter the implementation period, during which we continue to be bound by the directive, so the draft regulations will come into force on 18 April 2019.

There is a slight wrinkle in respect of central subcontracting authorities such as local authorities and utilities. The directive confers on member states the discretion to postpone the application of implementing provisions until 18 April 2020, in respect of those entities. We have taken advantage of that derogation. I think it is right that we allow procuring authorities other than central Government authorities time to adapt to the change. However, there is nothing to prevent those authorities from accepting electronic invoices prior to that date.

In the event that no agreement is reached, we will, as we have discussed, consider the options available. We would, of course, be free to implement this provision. I see no reason why we would not choose to do so, but we would make the decision at that point.

As set out in further detail in the explanatory memorandum, we have also taken the opportunity in this instrument to make minor amendments to how the Public Contracts Regulations 2015 and the Concession Contracts Regulations 2016 refer to offences under the Modern Slavery Act 2015. Those are essentially tidying-up measures.

I hope that members of the Committee will agree that with this instrument we have the opportunity to provide real benefits to both the supplier community and the public sector, and I look forward to seeing its progress through both Houses. I commend the regulations to the Committee.

--- Later in debate ---

[Oliver Dowden]

I welcome the support of the Opposition Front-Bench spokesperson, the hon. Member for Leigh, for these measures. I will try to address the points that she has raised; if I fail to address any of them, I will be happy to come back to her in writing.

First of all, in relation to timing it is true that the directive came into effect in 2014. However, it relied on the publication of the European standard, which was only published in 2017. Member states were given 18 months from then to bring forward their measures.

In respect of the delay for smaller entities, those are quite welcome to adopt the standards at an earlier stage; the regulations are simply permissive to allow them a longer period of time. I felt it was appropriate to invoke this derogation to allow those smaller entities a long period, because it may take them more time to adjust to the necessary changes to their procurement systems.

In respect of the other points that the hon. Lady raised, it is important to clarify that no private sector business, whether a large business or an SME, will be required to take advantage of these regulations. The regulations permit businesses, if they wish, to invoice electronically, but they can continue to invoice in a paper-based form if they wish. What the regulations do is require the Government supplier to accept an e-invoice if they so choose; if there is not a term within the contract that allows for e-invoicing, the regulations will imply that. They are very much about enabling rather than requiring.

The hon. Lady raised the point about Cabinet Office prompt payment. She is absolutely right that there was a decline in Cabinet Office prompt payment, which was due to the adoption of a new invoicing system. That is common with other Departments. I think I updated her, or another Opposition Member, in the House a couple of weeks ago on the progress that we are making in that regard. In fact, we are back up to standard now in the most recent months when it comes to the speed of prompt payment, but I would be very happy to write to her to set out those figures in detail.

Regarding impact assessment, Cabinet Office economists have calculated that the direct costs and benefits to business flowing from this directive do not exceed £5 million. On that basis, we did not feel it necessary to undertake a full regulatory impact assessment to be cleared by the Regulatory Policy Committee.

Cyber-security is very important, which is why the Government have established for the first time a national cyber-security strategy, accompanied by £1.9 billion worth of funding. As part of that strategy, they have set up a national cyber-security centre that sets standards for cyber-security. In addition, the revised Government playbook—the rules for procurement that I published the week before last—contains explicit provisions in relation to cyber-security requirements for all those contracting with Government.

I hope that my response has addressed the points that the hon. Member for Leigh raised. As I said, this is a fairly straightforward measure: it is simply about enabling businesses to invoice electronically, and requiring suppliers to accept that. I am grateful for the Opposition’s support, and I commend the regulations to the Committee.

Question put and agreed to.

Draft Public Procurement (Amendment etc.) (EU Exit) Regulations 2019

Oliver Dowden Excerpts

Wednesday 13th February 2019 General Committees

[The Parliamentary Secretary, Cabinet Office (Oliver Dowden)]

I beg to move,

That the Committee has considered the draft Public Procurement (Amendment etc.) (EU Exit) Regulations 2019.

May I say what a pleasure it is to serve under your chairmanship, Sir Henry? The Government are committed to securing an agreement on the UK’s exit from the EU, but clearly we must be prepared for all outcomes. The legal framework for the regulation of public procurement by the Government and public sector bodies is essential to the day-to-day running of the public sector and to the economy. If no deal is reached with the EU, certain aspects of that legal framework will be deficient, leaving the public sector and businesses without legal clarity. The statutory instrument therefore seeks to address those deficiencies in a no-deal scenario.

The amendments in the draft regulations provide a balance between the need to maintain continuity based on the established framework and principles, and the need to correct those deficiencies to the extent permitted by the European Union (Withdrawal) Act 2018. Principally, the statutory instrument amends three sets of regulations that implement EU directives on awarding contracts and concessions in the public and utilities sectors outside the field of defence and security.

One of the key amendments is to replace the requirement to publish contract notices in the Official Journal of the European Union with a requirement to submit notices to the UK e-notification service. That is intended simply to comply with the publication requirements of the World Trade Organisation agreement on Government procurement. The UK e-notification service is being developed and is on track to be in place by exit day.

[Sir Greg Knight (East Yorkshire) (Con)]

I realise that the explanatory memorandum does not officially form part of the instrument we are debating, but it is there to help us. Paragraph 6.6 of the memorandum states:

“There are some deficiencies in the Regulations that have not been fixed in this instrument.”

Can the Minister tell us what those deficiencies are, when they are likely to be fixed and debated, and why we are doing this in a piecemeal manner?

[Oliver Dowden]

I am happy to write to my right hon. Friend with fuller details, but the instrument essentially seeks to align the procurement regime we have under the EU and bring it into UK law. There will be further opportunities to fix deficiencies as we continue to reform regulation in a post-EU environment.

[Alan Brown (Kilmarnock and Loudoun) (SNP)]

The Minister says there will be future opportunities. Surely, as the Minister responsible, he has already identified those opportunities and planned a timeline for making the fixes he thinks are required. Will he clarify that?

[Oliver Dowden]

The best approach to identifying opportunities for reforming procurement laws is to look at those laws in totality once we have left the European Union so that, to the point made by my right hon. Friend the Member for East Yorkshire, we can consider their full scope rather than doing things in a piecemeal fashion. In that way, we will be able to reform EU procurement law in its totality and ensure that we address the range of concerns about how that law works. Since we will no longer be bound by it, we will have the opportunity to do that in a full-hearted way.

[Mr Ranil Jayawardena (North East Hampshire) (Con)]

Further to the point made by the hon. Member for Kilmarnock and Loudoun, may I make a suggestion? Does my hon. Friend agree that broadband is critical for the future of our country, but that too often public procurement rules have been used to stop the roll-out of broadband by setting artificially high barriers to the provision of state aid by the Government? The state aid rules have been used against local communities. Will he look at that as he takes this policy area forward?

[Oliver Dowden]

That is one example. There are many such examples. The Government are still working on the assumption that we will reach agreement on the withdrawal agreement, that it will be passed by Parliament and that we will have a transition period, which will allow us two years to consider this further. I would like to have a Green Paper first so that we can discuss all the ideas before formally bringing forward legislation, to make sure we capture all the related issues.

[Alan Brown]

Can the Minister explain what checks and balances there are? The EU procurement rules were about open competitive tendering. We know that with Ferrygate it was a direct award. What checks and balances are there to stop the UK Government, rather than the Cabinet Office, from having too much power in the procurement process?

[Oliver Dowden]

The draft regulations take all the existing EU procurement rules and replace them in the law of the United Kingdom. All the remedies that exist under EU law will exist under these regulations. Such cases can be pursued in court, as was the case previously. There is no change to the law other than to bring these things into UK law, and no change to the remedies—they still exist in the courts as they did previously.

This statutory instrument confers a number of regulation-making powers. They mirror powers that the EU Commission and the European Council have under EU directives and regulations or the treaty on the functioning of the European Union. The current procurement regulations are subject to the derogation in article 346 of the treaty on the functioning of the European Union. That provision enables the UK to take necessary measures to protect essential security interests connected with the production of or trade in armed munitions and war material. That includes overriding the procurement rules or aspects of them.

To ensure that the UK continues to benefit from this important derogation once we have left the EU, we have incorporated the text of article 346 into the procurement regulations, with appropriate modifications. Currently, the arms and munitions that fall within the scope of the derogation are determined by a list drawn up by the Council of Ministers of the European Economic Community as it then was, back in 1958. The list includes portable and automatic firearms, ammunition, guided missiles, military vehicles and so on. The modifications we have made include a power for the Secretary of State for Defence to update that 1958 list, for example to take account of developments in technology. Given the nature of this regulation-making power and its potential to affect the scope of the procurement regulations, its exercise has been made subject to the affirmative procedure.

The other regulation-making powers will be exercised by the Minister for the Cabinet Office. They include the function to revalue the main financial thresholds following a biennial review on the same basis as the European Commission, and to convert thresholds of the agreement on Government procurement directly into equivalent sterling values. Also transferred is the power that the directives confer on the Commission to update the exemptions to the use of electronic means of communication, in the light of technological developments, and to update the technical requirements relating to tools and devices for the electronic receipt of tenders, as well as to take account of technological developments.

The updates would be made through regulations that are subject to the prior consent of Welsh Ministers or Northern Ireland Departments in respect of devolved Welsh or Northern Ireland authorities. The Commission’s power to amend the list of international agreements in the field of environmental, social and labour law, set out in annexes to the directives, has also been conferred on the Minister for the Cabinet Office by means of the Minister’s power to treat the list as though certain international agreements were removed and others not covered were listed. Again, any ensuing regulations are subject to the prior consent of Welsh Ministers or Northern Ireland Departments in respect of Welsh or Northern Ireland devolved authorities.

Finally, the Commission currently has the power to amend the annexes to EU regulation 2195/2002 of the European Parliament and of the Council on the common procurement vocabulary—CPV. That regulation will become retained direct EU legislation on exit day. The Minister for the Cabinet Office is given the same power to amend the annexes to the retained version of the regulation.

[Martin Whitfield (East Lothian) (Lab)]

I want to raise an issue about the drafting of the regulations that sticks in my craw slightly. Regulation 17(2) refers to the Utilities Contracts (Scotland) Regulations 2016. Clearly, the idea of adopting the Scottish Parliament’s statutory instrument to replace the European Union regulations is how the Government want to proceed, which is fine. However, unfortunately, in drafting it, the Government have omitted to make provision for it to be amended. Given that the Minister for the Cabinet Office has powers to increase the amounts when regulations kick in, a similar power rests with the Scottish Parliament and should be reflected in the regulations, so that the correct, updated regulations are referred to for utility companies. This provision is made earlier on in the regulations, so I think it is just a mere omission and if we have to revisit it, it can be done at the appropriate stage.

[Oliver Dowden]

I thank the hon. Gentleman for his intervention. I think he is quite right in that interpretation but I will confirm that.

The annexes set out a sophisticated vocabulary that enables numerical codes to be used to describe different kinds of works, supplies and services in, for example, notices that advertise procurement opportunities and so enable suppliers quickly to identify procurements that are of potential interest to them.

Moving on to the other amendments, the UK is moving forward in its activity to join the WTO agreement on Government procurement in its own right. We have reached the stage where GPA parties have agreed in principle to our market access offer and accession. However, in this instrument, we have taken precautions in case the UK’s accession to GPA has not been fully completed by exit day. One of the amendments ensures continued guaranteed access, rights and remedies on current terms for suppliers from existing GPA countries for a period of eight months from exit day. Without this amendment, suppliers from GPA parties would no longer have the guaranteed access, rights and remedies that they currently enjoy in our public procurement contracts. This will mitigate the risks of a short gap in GPA membership by facilitating continued market access.

Delays in the Trade Bill mean that we have also laid before Parliament for approval a further statutory instrument that would amend the regulations we are now debating, to implement a similar measure for certain bilateral trade agreements between the EU and third countries to which the UK is currently party via its membership of the EU. That will keep alive existing obligations towards suppliers in the countries with which the EU has, before exit day, entered into trade agreements, with provisions relating to public procurement, by which it is bound.

This second amending statutory instrument would also preserve existing duties towards GPA economic operators and amend the time period to 18 months from exit day. This change in the time period bring the GPA provisions in line with those related to the UK’s transitioned international agreements. This SI is also subject to the affirmative procedure.

Section 3 of the withdrawal Act has the effect that any EU legislation in force and applicable on exit day will automatically become part of UK law. The draft regulations modify various EU regulations and decisions that will become retained direct EU legislation. They also revoke for the whole of the UK the Commission’s implementing regulation that establishes standard forms of public procurement. The forms laid out in the Commission’s regulation will not be required for the new UK e-notification service. The service itself will be designed to elicit information in the form and the way it is to be submitted.

In summary, the regulations seeks to ensure that the current public procurement regime will continue to function after our withdrawal from the EU. It does not seek to make major policy changes or introduce new frameworks. Instead, it makes largely technical changes to correct deficiencies that will naturally emerge within our legislation on exit day. Left unamended, the existing regulations would not work as intended and would cause confusion and uncertainty for procurers and suppliers, hampering the public sector’s ability to obtain value for money from procurement. I therefore commend the regulations to the Committee.

--- Later in debate ---

[Oliver Dowden]

The Opposition spokesperson raised a large number of issues and I shall seek to address them all. If I fail to do so, I will be more than happy to write to her.

The starting point is to remember that the regulations are not intended to change our procurement regime. The opportunity to do that will come afterwards, depending on the future relationship that we negotiate—or sooner, in a no-deal scenario. With the regulations, we seek to replicate existing procurement rules to give stability to companies engaged in procurement, so that they will know that the rules under which they currently bid will continue after we leave the European Union. Of course there are areas of procurement that we would like to reform, but the regulations are not the appropriate vehicle for doing so; it would be better for us to look subsequently at reforming procurement in the round.

Within the context of existing EU procurement rules, we have made significant progress. The hon. Member for Leigh mentioned SMEs. In the last Parliament, for the first time, this Government set a target of 25% of all Government business going to SMEs, and we met it. In this Parliament, we have set a target of 33% and we are making progress towards that. Indeed, I have announced further measures to help us reach that point. However, the regulations are separate from that; they are about ensuring continuity, which in my experience is what businesses are after.

I will try to address some of her specific points. The hon. Lady rightly said the e-notification scheme is due to come into force at the end of March. Ministers in the Cabinet Office take a close interest in that, and we continue to believe that it is on course to do so. I do not think that there is concern about that. A question was asked about what would happen if, as we hope to, we leave with a deal. In that instance, the measures will simply be deferred. They may have to be amended, depending on the nature of the future political framework that is agreed, and how we implement it through primary legislation.

The regulations do not provide for oversight by the CMA of the procurement regime. Agreed suppliers will, however, continue to be afforded remedies provided for in the regulations. In that way, contracting authorities and other entities will be held to account by the courts—again, essentially replicating the situation that we had before.

The hon. Lady rightly raised GPA membership. From listening to her, one could be forgiven for thinking that we were somehow desperately off-track on GPA membership. We have reached agreement in principle for the United Kingdom to join the WTO GPA. We are confident that we will very shortly be in a position to lay statutory instruments before Parliament to enable that to happen.

There is a small chance of a gap between the “in principle” accession to the GPA that is already agreed and the “in law” joining of the GPA, essentially because of the number of days required to lay the statutory instruments before Parliament. What we are trying to do with the regulations, and the subsequent SI that I highlighted, is to give certainty in that scenario to all contractors who are not based in the UK that they can continue to access the UK as if we remained members of the GPA.

Theoretically, in that small gap there is a chance that another country could decide that there was no basis for UK companies to access their market. However, there is a pretty small chance of that, first of all because we have moved unilaterally to say that we would allow them access. On the basis of reciprocity, we would expect it.

Furthermore, almost every country, I think bar South Korea, would require an Act to be passed by its Government to exclude UK companies, and it would have to apply to a situation where the procurement process had commenced, a UK company had applied for it, and the process had concluded. Given that we have already reached agreement in principle to join and we are progressing at a very good rate, the chances of that happening are exceptionally small. However, to provide clarity we have said that overseas actors can have access to our market.

[Mr Jayawardena]

Looking at the history, Moldova was the only country to object to our accession to the GPA. Following further discussion with our mission in Geneva, Moldova has now agreed to withdraw that opposition. Indeed, the members of the GPA committee have agreed to our accession.

[Oliver Dowden]

My hon. Friend is right. Essentially, political agreement has been reached for the United Kingdom to join the GPA; these are just the remaining technical stages. I would happily outline them in more detail, but I shall not bore the Committee. In essence, we have reached an agreement; these are just technical measures to ensure that it happens.

The hon. Member for Leigh set great store by the question of an impact assessment. She rightly highlighted the explanatory memorandum, which sets out the impact in broad terms. When impacts are assessed to be below an annual cost of £5 million, a full impact assessment is not required. Our initial analysis is that it falls below that threshold; therefore, such an assessment is not required.

I hope that I have addressed all the points that the hon. Lady raised. As I said, I will happily take up further points subsequently through correspondence. Again, I reassure the Committee that the regulations make provisions for the status quo. They take the existing EU procurement laws and replicate them so that there can be certainty. The only real change relates to notification. Clearly, we will not have access to the OJEU, so we are creating our own notification system. However, it will replicate the existing OJEU notification system.

There are, of course, questions surrounding how we can reform procurement. In the end, leaving the European Union provides the opportunity for us to look at it more flexibly. However, the proper way to do that is through full consultation, looking at a total process of reform. That will rightly be considered by Parliament through primary legislation, which is a much better vehicle for such reform than a statutory instrument. On that basis, I commend the regulations to the Committee.

Question put and agreed to.

Resolved,

That the Committee has considered the draft Public Procurement (Amendment etc.) (EU Exit) Regulations 2019.

Oral Answers to Questions

Oliver Dowden Excerpts

Wednesday 6th February 2019 Commons Chamber

[Chris Green (Bolton West) (Con)]

1. What steps he is taking to encourage the use of innovative technologies to improve the delivery of public services.

[The Parliamentary Secretary, Cabinet Office (Oliver Dowden)]

Last month I announced five new public sector challenges, to be funded from the £20 million GovTech innovation fund. In the spring we will publish a strategy for the use of innovation in public services.

[Chris Green]

Can my hon. Friend confirm that the GovTech fund is being used to identify technologies with the potential to improve medical care and deliver better services at a lower cost?

[Oliver Dowden]

I am delighted to confirm that to my hon. Friend. There is huge potential here for improvement in public services. So far the GovTech Catalyst has funded two health-related challenges: the first seeks to improve the medication pathway for people entering custody, and the second will assess how machine learning could improve prediction and provision in relation to adult social care.

[Luke Pollard (Plymouth, Sutton and Devonport) (Lab/Co-op)]

At the weekend, 70 Labour MPs and Members of the European Parliament signed my letter to the Government asking them to review the operation of the EU settled status app for EU citizens, which is currently available only on Android phones and not on iPhones. What advice does the Cabinet Office gives other Departments to ensure that no digital discrimination is embedded in the new technologies that the Government are rolling out?

[Oliver Dowden]

The hon. Gentleman is right to raise the question of the digital verification system. It is perfectly possible to subscribe to it with any phone. The issue relates to the document verification, which can be carried out in respect of Android phones but not, currently, in respect of Apple phones. However, the Home Office is working on that as we speak.

[Scott Mann (North Cornwall) (Con)]

I know the Minister will be aware that delivering public services in rural areas is particularly challenging. Will he consider how he could use tech and innovation to facilitate better public services in areas such as those that I represent?

[Oliver Dowden]

My hon. Friend is absolutely right. One of the great aspects of the GovTech challenge fund is that it is often used in rural areas. In rural Scotland, for example, we are looking into how it could be used to help to ensure that the environment is properly managed, and we are working on other similar schemes.

[Jamie Stone (Caithness, Sutherland and Easter Ross) (LD)]

Time and again, Mr Speaker, you have heard me raise the issue of deeply unsatisfactory broadband coverage in my constituency, which greatly impairs the delivery of vital public services. Responding to a question that I asked not long ago, the Prime Minister mentioned the shared prosperity fund. Might that fund be used to tackle the problem of very poor broadband coverage? If the Minister cannot give me an answer now, will he agree to meet me to discuss the issue?

[Oliver Dowden]

I am always happy to meet all Members, and I have heard the hon. Gentleman’s representation in respect of the shared prosperity fund. Our industrial strategy has already committed us to spending more than £1 billion on digital infrastructure, including £176 million on 5G and £200 million on broadband for local areas. There is, I know, an issue with the Scottish National party Government getting the money to the frontline, which is why my right hon. Friend the Culture Secretary has announced that in future, money will go directly to councils.

[Jo Platt (Leigh) (Lab/Co-op)]

When it comes to the delivery of technology with the use of public money, we know whose side the Government are on: their mates in the megafirms. Their spending on Cloud provision with just one company, Amazon Web Services, has increased by 8,000% since 2015. The next time the Minister signs off another multimillion-pound tech contract, will he perhaps spare a thought for one of the UK’s incredible small and medium-sized enterprises?

[Oliver Dowden]

The Government are committed to ensuring that SMEs win their fair share of Government contracts. Unlike the Labour Government, this Government have set the target of devoting a third of all spending to SMEs. However, the hon. Lady rightly raised the issue of Amazon Web Services. Let us look at the figures. AWS is a G-Cloud supplier. A total of £3.2 billion has been spent on G-Cloud. How much has been spent on AWS? Just £70 million, which amounts to less than 2.2% of total spending.

[Mohammad Yasin (Bedford) (Lab)]

2. What recent progress his Department has made on its proposed changes to public sector procurement.

[Oliver Dowden]

We are determined to deliver value for money for taxpayers through better procurement, and to support a healthy and diverse supply market. We recently announced measures including simplifying procurement processes, taking account of social value when awarding contracts, and excluding large suppliers from Government contracts if they cannot demonstrate prompt payment.

[Mohammad Yasin]

I thank the Minister for his answer. The number of businesses receiving late payments from the Cabinet Office has nearly tripled in the past two years. Does the Minister agree that this makes a mockery of the Government’s plans to crack down on public sector suppliers who pay late?

[Oliver Dowden]

Prompt payment is important to all businesses, particularly small businesses. That is why we have set a target for 90% of undisputed invoices from small and medium-sized enterprises to be paid within five days. We are making good progress, and six Departments are already exceeding that target. I know that there has been an issue in respect of the Cabinet Office, but I can give the hon. Gentleman the latest figures, from December, which show that 95% of invoices are now meeting the 30-day target and that 82% are meeting the five-day target.

[Greg Hands (Chelsea and Fulham) (Con)]

Will the Minister join me in welcoming moves to roll over the WTO Agreement on Government Procurement—the GPA—and in welcoming the access that that would give to UK companies competing abroad and the opening up of our own markets to foreign competitors?

[Oliver Dowden]

I know that my right hon. Friend has a great deal of experience in this area, and he is absolutely right to highlight the importance of the GPA. I am pleased that we have made progress and reached agreement in principle for the United Kingdom to join the GPA, and I am confident that we will have that in place shortly.

[Mr Barry Sheerman (Huddersfield) (Lab/Co-op)]

Is not the Minister guilty of a bit of jiggery-pokery? [Hon. Members: “Oh!”] The fact of the matter is that if the Government looked at good examples such as Huddersfield University and Kirklees Council, they would see the way in which they emphasise local and regional procurement, which brings in jobs and wealth and retains them in our communities. Why do this Government not do the same?

[Oliver Dowden]

We are absolutely committed to ensuring that we get the very best suppliers, which is why we have introduced a balanced scorecard approach. That allows suppliers to take into account a wide range of factors, including environmental factors and factors relating to the quality of produce. Those are the sort of reforms that this Government are committed to introducing.

[James Gray (North Wiltshire) (Con)]

The Government give a very welcome emphasis to the employing of small and medium-sized enterprises in Government contracts, and that is very good stuff, but does the Minister not agree that in reality, Government procurement processes are so complex, so difficult, so massive and so expensive that it is actually companies such as the defence primes that get the contracts and then hammer down the prices they pay to their subcontractors? How can we find better ways to ensure that SMEs win some of those valuable contracts?

[Oliver Dowden]

My hon. Friend is absolutely right to highlight the issue of SMEs winning contracts. This is why we have abolished complex pre-qualification questionnaires on small-value contracts, for example, and in November I announced that if major strategic suppliers were not paying their small providers on time, they could face being excluded from Government contracts.

[Tommy Sheppard (Edinburgh East) (SNP)]

I am aware that current statute means that wage rates cannot be mandated, but it is possible to use the procurement process to encourage employers to consider paying the real living wage in the context of fair work policies. Indeed, that is the process undertaken by the Scottish Government. Will the Minister consider following Scotland’s lead and using procurement to ensure that employers pay the real living wage?

[Oliver Dowden]

I thank the hon. Gentleman for his question. I hope that he will acknowledge the progress that this Government have made in introducing a national living wage for the first time. The effect of that national living wage, which will rise by almost 5% this April, is that an average person working full time on the national living wage will be almost £3,000 a year better off—and that is not counting the massive increase in the personal allowance that also cuts their taxes.

[Christian Matheson (City of Chester) (Lab)]

Of course, it is not a living wage; it is just a minimum wage re-badged.

The Government have repeatedly insisted that Interserve’s

“current intentions are a matter for the company itself.”

However, it emerged last night that Cabinet Office officials were playing an active role in talks to negotiate a rescue package. It seems that the Government cannot make up their mind whether they have a responsibility to intervene and protect public services and jobs or whether to let the market decide, so which is it?

[Oliver Dowden]

The Government are absolutely clear that their principal task is to ensure the continued delivery of public services, and that is what we have ensured in respect of our strategic suppliers. The hon. Gentleman raises the case of Interserve. I welcome this morning’s announcement, which I am sure he has seen, which demonstrates that it is making good progress towards refinancing, but we are clear that that is a matter between the lenders to that company and the company itself. The Government are not a party to those negotiations.

[Daniel Zeichner (Cambridge) (Lab)]

3. What assessment he has made of the implications for his Department's policies of the Information Commissioner’s January 2019 report, “Outsourcing oversight? The case for reforming access to information law”.

Oral Answers to Questions

Oliver Dowden Excerpts

Wednesday 19th December 2018 Commons Chamber

[Mr Gary Streeter (South West Devon) (Con)]

2. What steps his Department is taking to move civil service jobs out of London as part of the Government’s industrial strategy.

[The Parliamentary Secretary, Cabinet Office (Oliver Dowden)]

We are committed to supporting economic growth across the United Kingdom. We have established the Places for Growth programme to relocate civil service roles to the regions and nations. That creates a presumption that newly created public bodies will be located outside London.

[Mr Streeter]

I thank the Minister for his answer. Can I invite him or the Secretary of State to come to Plymouth with me early in 2019 to see for themselves how digital connectivity has transformed our city? It is not just a great place to live, as it has always been, but now a great place to work and run a business. Would it not be very good for the Government to have a Government hub there?

[Oliver Dowden]

I know, thanks to my hon. Friend and other hon. Members, that Plymouth is a great place to work and do business. A number of potential hub locations are under active consideration. I would of course be delighted to meet a delegation from Plymouth, and I know that my right hon. Friend the Chancellor of the Duchy of Lancaster intends to visit Plymouth shortly.

[Chris Evans (Islwyn) (Lab/Co-op)]

When the Minister is looking to relocate civil service jobs outside London, will he look at post-industrial areas, which traditionally have high levels of unemployment, as a way to stimulate the jobs market?

[Oliver Dowden]

That is precisely the idea behind the Places for Growth strategy, which is to ensure Government activity benefits all parts of the United Kingdom. That is why we have created hubs across the United Kingdom—for example, in Edinburgh, Glasgow, Belfast, Leeds, Birmingham and Cardiff, to name just a few.

[David Duguid (Banff and Buchan) (Con)]

The Minister will be aware—at least, I hope he is aware—of the success of the Oil and Gas Authority being based in Aberdeen, as was presented in evidence to the Scottish Affairs Committee yesterday by both our right hon. Friend the Minister for Energy and Clean Growth and the Minister for Energy, Connectivity and the Islands from the Scottish Government. Does the Minister agree that moving civil service jobs out of London using that model has the potential to boost local economic growth across the UK?

[Oliver Dowden]

My hon. Friend is absolutely right. That forms a core part of the Government’s industrial strategy. As I have said, we have already created hubs in both Edinburgh and Glasgow, but I am open to all representations for further relocations of Government activity.

[Jamie Stone (Caithness, Sutherland and Easter Ross) (LD)]

Mr Speaker, you would be surprised if I did not mention the great benefits in this of the far north of Scotland: a lovely environment, splendid education and cheap housing and accommodation. Positioning civil service jobs in the north of Scotland, alongside Scottish civil service jobs, would be good for the relationship between Scotland and London, and it would help strengthen the Union.

[Oliver Dowden]

The hon. Gentleman makes the case exceptionally well. That is precisely why we are ensuring that Government jobs are located in all parts—all nations—of our United Kingdom. I know that there is already considerable space activity in his constituency.

[Carol Monaghan (Glasgow North West) (SNP)]

3. If he will make it his policy to introduce the real living wage across all Government Departments and to seek accreditation from the Living Wage Foundation.

[The Parliamentary Secretary, Cabinet Office (Oliver Dowden)]

We are addressing this issue through the application of the statutory national minimum wage and the national living wage. This is based on the advice of the Low Pay Commission. From April, the national living wage will rise again—from £7.83 to £8.21 per hour—handing a full-time worker a further £690 annual pay rise.

[Carol Monaghan]

This Government like to talk about employment levels, but they stay silent on the fact that many people are now struggling with in-work poverty, which is rising among working parents in particular. Does this Minister believe that his kid-on living wage is more effective at tackling in-work poverty than the real living wage promoted by the Living Wage Foundation?

[Oliver Dowden]

The hon. Lady is absolutely correct: we do continue to talk about employment, because 2 million jobs have been created under this Government. On the point about the national living wage, we were of course the first Government actually to introduce a national living wage. The aim is that that will rise to 60% of median income by 2020, and it is actually rising faster than the real living wage.

[Tommy Sheppard (Edinburgh East) (SNP)]

Everyone in the country knows that the Government’s pretendy living wage is not the same as the real living wage. It pays an awful lot less, and it excludes millions of younger workers. At this season of good will, will the Government not commit to making it their policy next year to seek accreditation from the Living Wage Foundation and show leadership in the country in taking on low pay?

[Oliver Dowden]

I think the hon. Gentleman is a little dismissive of the national living wage, which, since it was introduced, has led to a pay rise for people on the lowest incomes of almost £3,000 a year. It is rising faster than his proposal, and it will reach 60% of median income by 2020. Post that, we will look again at further increases.

[Afzal Khan (Manchester, Gorton) (Lab)]

4. What recent assessment he has made of the capacity of the civil service to manage additional responsibilities arising from the UK leaving the EU.

--- Later in debate ---

[The Parliamentary Secretary, Cabinet Office (Oliver Dowden)]

The hon. Gentleman has raised the issue of Capita’s Army recruitment contract. I can tell him that we have a plan to address those challenges. We are working on a manning campaign, and we are in close contact with the chief executive of Capita to deal with precisely that issue.

[Derek Thomas (St Ives) (Con)]

T7. It is right that we try to ensure that the voting system is as fair as possible. What work is the Minister doing to improve the current system, and does she agree that a close link between constituents and their representatives is important?

Government Estate

Oliver Dowden Excerpts

Wednesday 19th December 2018 Written Statements

[The Parliamentary Secretary, Cabinet Office (Oliver Dowden)]

I have today laid before Parliament, pursuant to section 86 of the Climate Change Act 2008, “State of the Estate in 2017-18”. This report describes the efficiency and sustainability of the Government’s civil estate and records the progress that the Government have made since the previous year. In 2017-18 the central estate reduced in size by 2% and is now 7.7 million square metres and central estate operating costs reduced by £22 million, in real terms. At the same time, vacant space across the Government estate is just 1.4%, compared to 7.1% in the private sector. The estate continued to contribute to sustainability targets set by the Government, showing a 39% reduction in greenhouse gas emissions, a 55% reduction in paper use and a 40% reduction in waste since 2009-10. The report is published on an annual basis.

[HCWS1211]

Oral Answers to Questions

Oliver Dowden Excerpts

Wednesday 14th November 2018 Commons Chamber

[Johnny Mercer (Plymouth, Moor View) (Con)]

6. What assessment he has made of the potential effect of Government hubs on levels of efficiency in the civil service.

[The Parliamentary Secretary, Cabinet Office (Oliver Dowden)]

The hubs programme saves money and creates a better place to work by bringing together Government activity on to single sites. We make extensive use of shared spaces, smarter working and workplace design. This encourages productivity as well as reducing vacant space. Indeed, in total, the programme is saving £2.5 billion over 20 years.

[Johnny Mercer]

The Minister knows what a capable and deeply talented Minister he is, and there are plenty of people like him in Plymouth, Moor View. Does he agree that Plymouth would be an ideal place for one of these Government hubs?

[Oliver Dowden]

Flattery will get my hon. Friend everywhere, and may I repay it by saying that I know what a powerful advocate he is for the city of Plymouth? He once again makes his case exceptionally well. While further hub locations cannot be confirmed until commercial negotiations have concluded and Departments have informed staff, future locations are under active consideration.

[Luke Pollard (Plymouth, Sutton and Devonport) (Lab/Co-op)]

There is cross-party support for moving Government hubs to Plymouth. What support can the Minister give to local authorities such as Plymouth City Council, which is working to create the buildings and land for these Government hubs to move into?

[Oliver Dowden]

The hon. Gentleman rightly highlights the Government’s One Public Estate programme, and the example he cites in Plymouth is just one of many. Overall we expect to release land for 25,000 new homes and create 44,000 jobs by 2020.

[Ross Thomson (Aberdeen South) (Con)]

T1. If he will make a statement on his departmental responsibilities.