Procurement Bill [Lords]

Sarah Olney Excerpts

2nd reading
Monday 9th January 2023 Commons Chamber

[Sarah Olney (Richmond Park) (LD)]

The Liberal Democrats support the Government’s stated ambition in the Bill of speeding up and simplifying the procurement process and creating greater opportunities for small business to access public contracts. However, the Bill could be improved on a number of points. It is important that we get this right, especially at a time of straitened public spending and a cost of living crisis. It is fundamental that Government and Parliament are seen to be taking every care possible with taxpayers’ pounds. We have seen the recent shambolic procurement of PPE and the resulting scandals. I do not think the public currently have confidence in the Government’s ability not to waste money or to create value for local communities. As it stands, the Bill does not align procurement to our environmental and climate goals.

The Bill as originally drafted by the Government included a huge carve-out for the NHS. It was originally proposed that instead of following the procurement regime provided for in the Bill, the Secretary of State for Health would be able to make up their own rules for huge swathes of NHS procurement by secondary legislation. I am pleased that Liberal Democrats in the Lords amended the Bill to ensure that the NHS would be brought into scope. It is important that we maintain that amendment because NHS spending accounts for such a large amount of public procurement. It would be absurd for it to be excluded. I would like the Minister’s assurance that they will maintain that Liberal Democrat amendment in the Bill.

NHS procurement is the most recent example of the most egregious failures of public procurement. The bypassing of the usual procurement rules via VIP lanes saw £3.8 billion of taxpayers’ money handed over to 51 suppliers of PPE, many of whom were closely tied to Conservative Ministers and their friends. We have had months of allegations about PPE Medpro, and today we have heard that SG Recruitment was handed a £50 million contract after being referred by a former Conservative party chair.

The Government will be resistant to some of the rhetoric around VIP lanes, but I urge them to look at the work of the Public Accounts Committee, of which I am a member. We have done extensive inquiries into PPE procurement over the last few years and have found a number of failings that cannot be excused by the urgency that we all accept was a key factor of that procurement. The Public Accounts Committee found that at no stage was any consideration given to

“potential conflicts between individuals making referrals through the VIP lane and the companies they were referring.”

It was therefore not surprising to see reports emerge of excessive profits from PPE contracts and confirmation of such conflicts of interest. The Government really must address that; the public will expect it if the Government are to live up to their stated ideals of transparency. The Prime Minister was apparently “absolutely shocked” to read of the allegations against Baroness Mone. We should attempt to save him from future such alarm. The Liberal Democrats tabled an amendment in the Lords to ban VIP lanes, which was voted down by the Conservatives, but I urge the Minister to reconsider.

I want to talk a little about social value, which gives me an opportunity to welcome the hon. Member for City of Chester (Samantha Dixon) to her place and to congratulate her on an excellent maiden speech. She summed up what social value is, in an excellent description of what it means in the city of Chester. I very much disagree with what the right hon. Member for North East Somerset (Mr Rees-Mogg) said about social value being in the eye of the beholder. I do not think that is true.

The hon. Member for City of Chester described extremely well what can be done when public procurement is used to attain a number of different social outcomes. The danger of not providing specific examples or definitions of social value in the Bill is that procurers will default to a definition of purely financial value. That would be a huge mistake and lead to a huge number of missed opportunities. I urge the Government to look again at the drafting of the Bill to enable it to unleash opportunities for charities and social enterprises to innovate in public service delivery, and to ensure that local communities are the key beneficiaries of an improved procurement regime.

The National Audit Office and the Environmental Audit Committee have found that departmental public procurement lacks consideration of net zero and environmental goals. We need a procurement system that encourages businesses to move their supply chains to a more sustainable model, but the Bill is just another piece of legislation introduced by the Conservative Government that fails to show the ambition that is needed. It is essential to have objectives that commit the Government to sustainable procurement as part of the net zero goal, and those should be included in the Bill. I hope the Government will look again at that.

The Liberal Democrats support efforts to reform to our procurement regime. We want to increase transparency and create opportunities for small businesses, but as it is currently written, the Bill will not achieve that. It fails to put an end to VIP lanes, it fails to grasp the opportunities for a system to create social value and it fails to support the Government’s own stated net zero goals. However, I am glad that the Government seem already to have acknowledged that there is much room for improvement in the Bill. They tabled almost 350 amendments to their own legislation during its passage through the Lords, and I will be interested to see how it proceeds through the Commons. I hope the Government will continue to engage constructively and look to address some of the concerns that have been outlined today.

Procurement Bill [Lords]

Sarah Olney Excerpts

Report stage
Tuesday 13th June 2023 Commons Chamber

[John Penrose]

Absolutely; that is a good and broad-based example that proves the concept’s breadth of applicability.

The whole idea behind that is based on the What Works Network, which is currently backed up by the evaluation taskforce—a joint unit between the Cabinet Office and His Majesty’s Treasury. That is long-standing expertise—over 10 years’ worth—in arm’s length evaluation of Government contracts. It is a great idea in principle, and it has its roots very firmly in successful examples such as the National Institute for Health and Care Excellence, which does a crucial job relating to the medicines bought by the NHS.

But—and it is a very big and important “but”—just how much of that £300 billion-worth of public expenditure is properly evaluated each year? The answer, or the “stat of shame” as it is described in the civil service, is 8%—£1 in every £12. That is shocking and should worry us all. Whether or not we are concerned about value for money or the effectiveness of our public services, 8% is far too low. It is true that some major projects have their own arrangements, including gating agreements and a much more structured approach, which we hope will drive improvements, but for everything else—the annual contracts granted on a three-year rolling basis, then renewed, extended and renewed again—that is where the opportunity is, that is where the magic is, and that is where the potential for massive savings and better value for money really lies.

It is an old marketing truism that most marketing and advertising directors will say that they know that they waste roughly 50% of their advertising budget, but they just do not know which half. This will be an opportunity for us, when it comes to Government expenditure, to break that particular truism in half and say, “We will know.” The amendment allows the Minister to exclude contracts if he thinks they are too small or are governed by national security, but for everything else in that £300 billion, or as much of it as we can possibly manage, we will know up front what the contract is supposed to achieve, which is, after all, a rather basic thing—one would think that that would be automatically recorded, but at the moment it just is not.

We have to say up front what we are trying to do, and we are supposed to say at the end of the contract, “Well, did we do it?” That has to be evaluated by an arm’s length body according to the existing independent criteria laid out in something called the Magenta Book, which is long established and well respected. If we do that evaluation, we can then ask, “Did it work?” If it did not, we get a learning loop; an opportunity—as the new economy specialists and entrepreneurs call it—to “fail fast”, to ensure that we spot the duds and do not renew or extend them, or allow them to carry on rolling over willy-nilly. Instead, we say, “We are going to change something because this did not work.” That will be published, and then we will not renew that contract in that form. We will change it to fix the faults that would by then have been identified. At the moment, those faults are not being identified and are allowed to continue to roll and roll.

That is a blessedly simple idea. It will also pay for itself, as I said earlier when the Chair of the Public Accounts Committee was giving her speech, because the amount of money that it would save would pay rapidly not just for the existing costs of the What Works Network, but probably for a huge expansion, were Ministers so minded, of such evaluations to other parts of the national procurement effort. It would therefore cost the taxpayer net not a bean, it would dramatically improve value for money, and it would improve the credibility of our public service delivery, which all Governments of every stripe always struggle with. It would be a ready-made arm’s length route for politicians of any party to say, “We are doing the right thing. This is done independently. We will make sure that, next time around, we weed out the bad and expand the good.” That could be genuinely revolutionary.

[Sarah Olney (Richmond Park) (LD)]

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

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

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

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

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

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

[Nigel Mills (Amber Valley) (Con)]

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

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

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