Procurement Bill [HL]

Debate between Baroness Thornton and Lord Lansley

Committee stage
Wednesday 26th October 2022 Grand Committee

[Lord Lansley (Con)]

My Lords, this is quite a large group, led by Amendment 268, and it encompasses a number of issues all of which relate to the structure of contracts and how contracting authorities enter into agreements with their suppliers. I will not attempt to speak to anything other than my five amendments, save to say that the first, Amendment 268, originally went alongside Amendment 269, which has subsequently been withdrawn but was in the name of my noble friend Lady Neville-Rolfe. Were it still there, I would have said that I have some sympathy with what she says, as there can be circumstances in which a contract, in effect, looks for one item of delivery. Therefore, in my view, one quantified key performance indicator may be appropriate and the requirement to have at least three would be unnecessary. The point is that contracts should have key performance indicators.

My point in Amendment 268, which starts this group so I am able to move it, is to replace the reference to “key performance indicators” with “quantifiable measures”. I entirely admit that we know where we are with KPIs, everybody has them and so on. The trouble is that KPIs can be non-quantifiable and qualitative. That is not what we are looking for here. There is a risk that, if we are not precise about it, they will not be quantifiable, and quantifiable is what we are looking for. I do not think key performance indicators should be subjective; they should be objective and demonstrably proven. Suppliers have a significant benefit where that is the case.

That is Amendment 268, and it is more or less probing. Many of my amendments in this group are intended to ask my noble friend and the department whether they will take account of these points in the way they draft the national procurement policy statement in the guidance that follows.

Amendment 270 also relates to key performance indicators and is linked to a point we discussed on Monday, which is that the structure of the relationship and contract entered into with suppliers should relate to the original tender and the specifications in it. The amendment says that the key performance indicators “must relate” to the tender. Likewise, I hope that my noble friend will say that the Government understand that and that that is their intention. Otherwise, we run the risk that people will enter a competitive selection process, win that process and negotiate a contract but, suddenly, the contract asks them to do things that were not in the original specification. That should not be the case.

My third amendment in this group is Amendment 364. As one reads the Bill, one may come across something and think, “How does that work?” This relates to changes in the contract and the definition in Clause 69 of “substantial modification”. The first definition is that the term of the contract is increased or decreased

“by more than 10 per cent”.

Most contracts are expressed in terms of months and years, and 10% is an awkward measure: “10% of an 18-month contract is 1.8 months—let’s work that out in days”. Can we not write this is in a slightly simpler way? One-sixth has the benefit, in my view, of making a substantial modification slightly more than 10%— 16% or thereabouts—but the point is that it is readily transferrable into months and years, particularly months. So, if a contract for 18 months is modified by more than three months, you know where you stand; it is dead simple. The purpose of the amendment is to suggest that it could be done a little more simply.

My final two amendments are Amendments 397 and 400, which relate to the termination of a contract and to Clause 72. The clause states:

“every public contract … can, if a termination ground applies, be terminated by the contracting authority”,

and a list is then given of the termination grounds. I do not know whether this has been left out deliberately, or because it does not appear in the public contract regulations, or because it is intended to be part of general terms and conditions anyway and therefore does not need to be specified in legislation. But force majeure is, I think, a termination ground for a contract, so I am not sure why it is not mentioned. The point is that it should be mentioned—and if it is, there is a problem with it.

I declare an interest, and in doing so revert to what I was saying earlier about the European Commission. This issue arose for us—my wife’s company—during the pandemic. We were contracted to supply a number of events and when the pandemic hit, or shortly thereafter, some of them had to be cancelled. Members will not be surprised to hear that, under those circumstances, a significant amount of expenditure had been incurred, including cash expenditure on locations, suppliers, venues and so on. The term of the force majeure written into the European Commission’s standard contract was that, at the point at which force majeure is notified, payment for the services provided is required. As noble Lords can imagine, initially, they said, “Well, you haven’t provided those services. Those events haven’t happened and we won’t be having them.” I will not bore noble Lords with all the detail, but the net result was that we lost money. We did not lose as much as we had feared because we had a negotiation, but, according to the letter of the contract, they could have said, “You’ve spent tens of thousands of euros on events that will not now take place, but because they are not taking place, you’re at risk and you will meet the cost.” This a very large public authority expecting an SME to take the hit. We did discuss it and they did come round, but I do not think that that arrangement is sensible.

I cannot imagine that our experience is in any sense unusual. During the pandemic, thousands of businesses must have had exactly the same kind of force majeure complication. In public contracts, the force majeure contract should say what I suggest in the amendment: that, under those circumstances, when the termination ground is notified, there should be a requirement to meet the expenditure

“necessarily incurred in relation to the contract”

up to that point.

I will be happy if my noble friend the Minister is able to say, as with the other amendments, that these are interesting points and she will take them away and look at how the guidance or the statement might reflect them for the future. I beg to move Amendment 268.

[Baroness Thornton (Lab)]

My Lords, my speech is a good way of following the excellent introduction to this group of amendments by the noble Lord, Lord Lansley. I start by thanking my noble friend Lady Hayman of Ullock for putting her name to Amendment 276A and the noble Baroness, Lady Bennett, and the noble Earl, Lord Devon, for putting their names to both Amendments 269A and 276A.

As the noble Lord, Lord Lansley, said, Amendment 269A is dealing with the key performance indicators, and it adds a line that I hope the Minister will find useful:

“including at least one indicator in relation to social value.”

This would mean that all public sector contracts over £2 million would have to include a key performance indicator on social value. This would ensure that social values are included in all public sector contracts over £2 million and would send a clear signal to the private sector in particular. It would also ensure—similar to Amendment 477A, which we discussed on Monday—that contracts with social value commitments are monitored effectively and transparently.

Amendment 276A concerns transparency and “open book accounting”. It would insert a proposed new clause that I hope the Minister will see as helpful, given that she has spoken already in Committee about transparency and its importance in the spending of public funding. It says:

“All suppliers bidding for public contracts must declare the expected profit and surplus they expect to generate through the contract.”


In childcare, for example, the top 10 providers have made £300 million in profit, despite the standards of care falling and local authority budgets being under such pressure. We know this because the newspapers have reported on the conditions in which we have found cared-for children. During Covid, when we had PPE, a number of companies were making significant profits from these contracts without the need to report to the contract what margin they were prepared to make. I believe that this prevented the state adequately protecting our public money.

This amendment would mean that, on all government contracts, the supplier would have to report what profit or surplus they were expected to generate from the contract and then report back each financial year on how much profit or surplus they had generated—although I do not believe that this would solve the problem of people charging the state too much money for goods and services, and there is still a risk that companies could cost-shift artificially to reduce their declared profits. This may well leave the taxpayer in a better position to understand the true costs of contracts and would advantage providers such as social enterprises and SMEs, which are more likely to be investing the money received from contracts back into their businesses than extracting public money as profit. That is an important point because charities and social enterprises are bound by their rules to complete their accounting in two or three ways, which would include the social value of the contracts they are fulfilling.

Health and Care Bill

Debate between Baroness Thornton and Lord Lansley

Lords Hansard - Part 2 & Report stage
Thursday 3rd March 2022 Lords Chamber

[Lord Lansley (Con)]

My Lords, noble Lords will recall from Committee some substantial discussion about whether it was wise for the Secretary of State to take additional powers of direction in relation to NHS England. I suppose I should declare an interest since I gave the NHS commissioning board, or NHS England, the freedoms it currently enjoys. I am probably the person least likely to be persuaded that it is a very good idea to take all that away. After our debate in Committee, I thought it was probably sensible, rather than to seek to remove the powers of direction that the Secretary of State is given under Clause 39, to look at the exceptions to that power in new Section 13ZD and ask: are these all the exceptions that we should have?

On Amendment 83, the conclusion I reached was that there were at least two specific areas which are not mentioned in new Section 13ZD but should be; namely, limitations on the use of this power on the part of the Secretary of State. First, the local allocation of resources to integrated care boards—and the difficult decisions of trying to remedy the inequalities in access to healthcare services through the resource allocation process—is not something which any of us want the Secretary of State to interfere with; otherwise, it is sure to be regarded as being done for a political purpose, even if it might be done for another.

Secondly, there is the question of

“procurement of goods or services”.

After all the experience we have had over recent months, the last thing any of us wants is to go too far in the direction of the Secretary of State having a power in relation to procurement when that can perfectly well be given as a responsibility to NHS England. This is Amendment 83, and I hope that my noble friend, if he cannot accept the amendments, will give us some specific assurances in relation to the Secretary of State not using those powers.

In this group, I also put my name to Amendment 84, which would remove Clause 40—and, by extension, Schedule 6—from the Bill. This is about the Secretary of State coming in and acquiring more powers than was formerly the case. I was shadow Secretary of State for six years or so. During that time, I would have loved it if the then Secretary of State had all these powers to intervene in every reconfiguration, because I went around the country—as people are fond of reminding me—mobilising opposition to some of the ways in which the health service, led by the then Government, was trying to reconfigure services. This is not something that the Secretary of State or the current Government should wish for themselves or for their successors in office. I will not go back into all the arguments, but there are plenty of good examples of where, if the Secretary of State had this power, people would press the Secretary of State to use it—and it would be deeply unwise for a Secretary of State to get involved.

The justification on the part of the Government is that it stops this going on for ever. But there is a reason that these things go on for a long time—because they are intensely difficult, and the balances are very difficult to strike. Sometimes, the processes of consultation and public engagement take a long time. If the Government’s argument is that they are going leap in, intervene and settle it all quickly, both sides will yell when they do that. We can be absolutely certain of this. No one will be happy, and everyone will blame the Secretary of State. This is very firmly in the “be careful what you wish for” category. We would do the Government a great service by deleting Clause 40 from the Bill. If the noble Baroness, Lady Thornton, pursues that, I will certainly support her. I beg to move Amendment 83.

[Baroness Thornton (Lab)]

With the leave of the House, I thought it might be useful if I used my slot to speak right now on leaving out Clause 40. First, I thank the noble Lords, Lord Patel and Lord Lansley, and the noble Baroness, Lady Walmsley, for putting their names to this amendment. The noble Lord, Lord Patel—with whom I spoke this morning, and who is definitely on the mend, so I hope we will see him next week—said how strongly he supports the amendment. I will speak very briefly because we have already said much of what needs to be said about saving the Secretary of State from himself—as the noble Lord, Lord Lansley, said, I think. This is what this amendment is about.

Clearly, this is not what the NHS asked for in the Bill. It did not ask for this power. It has been added to the Bill—by a previous Secretary of State, I suspect—and I hear rumours that even the current Secretary of State is not a great fan. Why would any Secretary of State want to have this power—to be lobbied and drawn into any minor local dispute, particularly as we head towards a general election?

I have a small anecdote. A small coastal town had a small hospital with an accident and emergency department. It could not be properly staffed, it regularly closed for random periods, and far too often patients arrived there only to be moved to the larger A&E 20 miles down the road. Proposals were made to close it—and of course, outrage ensued. “Save our A&E”, people said, even though it was unsafe. Local politics were poisonous, and the blame for the closure was thrown on opponents, whichever side they were on.

However, over time, good communications, clinical leadership and, eventually, bringing local people into the team, got the proposal moving. People understood what was needed and why, and the reconfiguration process went through its stages, with external reviews and analysis by the national clinical advisory team, which all gave reassurance. The clincher came when a distinguished clinician leading the review told a meeting that he would personally go and paint over the road signs for the A&E, because it was so unsuitable. It shut, which probably means that lives were saved.

The process of rational argument and proper analysis works, and on this occasion we should not just leave it to local politics to decide what reconfiguration means. The Secretary of State has enough powers to direct the whole NHS in its fullness, but should not be involved in what may be very small reconfigurations indeed. We agree, and many people in the NHS and its organisations agree, that this clause should be removed from the Bill.

Health and Care Bill

Debate between Baroness Thornton and Lord Lansley

Lords Hansard - Part 1 & Report stage
Tuesday 1st March 2022 Lords Chamber

[Lord Lansley (Con)]

My Lords, I join the debate briefly to add my thanks to the Government for the amendments on research that they have brought forward in this group. It is extremely helpful, as the noble Lord, Lord Kakkar, said, to entrench the concept of a research culture inside the NHS. In our various ways and guises, we have all encountered some of the difficulties of diffusing innovation and the take-up of new medicines in the NHS.

The point was made very well by the noble Lord, Lord Hunt of Kings Heath, but he did not say why the NHS does not adopt new medicines as rapidly as some other European systems have. I do not think we have more conservative clinicians than other countries, but we do not have a third-party payments system. We do not have a system whereby the patient can ask “What about this?”—these days, increasingly, they do—and the clinician can say yes, and pass the bill to somebody else. Instead, our system centrally determines the extent to which new medicines will be available. We have a particular requirement in the National Health Service for a system which looks for areas where there is value in innovation, disseminates it, takes it up and makes it available to patients.

I make two other points. One is to say thank you, as I am not sure I will get another opportunity to do so. We had substantive discussions about rare diseases; the noble Lord, Lord Sharkey, in particular spoke very well and fully about the needs involved, and the Government published their England Rare Diseases Action Plan yesterday. On orphan drugs, that will give significant additional impetus to the availability of treatments for those with rare diseases. I very much welcome that.

Secondly, Amendment 178 in particular is interesting. I do not necessarily advocate that we adopt it, but it asks the Government do something that they generally have not done and ought to do, which is to come back to the issue of access to medicines and treatments—and, I would add, to medical devices—and ask how well we are doing at the process of bringing that into effect and how well our Accelerated Access Collaborative, which is supposed to look at all these things and make them work together, is making that happen.

The beauty of Amendment 178, on which I will add just a little, is that we ought to have a very clear timetable for how we move the system forward. I hope the Government will adopt this. In January 2024, we will have the next voluntary pharmaceutical pricing and access scheme. The industry will be looking, rightly, to arrive at a position where all the initiatives mentioned give patients access to medicines in this country as soon as in any other healthcare system. On that basis, the industry will be prepared to understand that not just the NHS but the Government will look to get some pretty cost-effective prices out of it.

Now I do not happen to think that it is NICE’s job to make that relationship happen. I happen to think that NHS England is increasingly equipped to be a central player in this process. It should sit alongside NICE when it carries out health technology assessments in what is effectively a trialogue with the industry and say, “Well, how can we ensure that the patient has access to this medicine, and at what price? Can NICE act as the referee to establish whether the price and the incremental benefit are reconciled to be cost effective for the NHS?”

We should build that into the system over the next 18 months so that, when we start the new scheme in January 2024, the system is understood to work. It should not depend on large-scale transfers of money, with overpriced new branded medicines on the one hand being recycled back to the NHS to go into the innovative medicines fund on the other. This tracking of money around the system is not the best way to make it happen. We should aim for the industry to be paid what the health technology assessments and the NHS budget requirements mean is a fair price for the medicines it is providing—and that is what the industry should expect.

Everybody should be working to arrive at a position where, when a medicine obtains authorisation—in other words, when it is deemed safe, clinically effective and of good quality—and a clinician recommends it for a patient, the patient should have access to that medicine through the NHS. That is what we are aiming for. It has not always been true, but it ought to be in the future. We need a system that people, including clinicians in the NHS, understand and that supports their ability to prescribe medicines in that way.

[Baroness Thornton (Lab)]

My Lords, I do not intend to speak about this for very long, because I feel that I am the least well-equipped person in the whole Chamber to do so—possibly with the exception of the Minister, which is often the way and is how I felt when I was a Minister; I would stand up to speak about research and other huge subjects and everybody else in the Chamber who had spoken certainly knew a lot more than I did, and that is the case here.

Noble Lords may recall that the starting point at Second Reading and in Committee was that there was no place for research in the Bill at all—so I congratulate noble Lords who picked this up and ran with it, and, indeed, the Minister and the Bill team on taking it on board and producing these amendments. That is helpful; as the noble Lord, Lord Kakkar, said, it is about the future and it is exactly the right thing to do.

I also agree with the noble Baroness, Lady McIntosh, and my noble friend Lord Hunt in their disappointment on the issue of NICE. They are quite right about the access and availability of medicine and devices to healthcare practitioners and that the system is still uneven; also, of course, nobody is asking how we are doing and whether it is working. It is a shame that these aspects have not been included in the Bill, but I suspect that the noble Baroness and my noble friend will probably live to fight another day.

Health and Care Bill

Debate between Baroness Thornton and Lord Lansley

Committee stage
Thursday 20th January 2022 Lords Chamber

[Lord Lansley (Con)]

My Lords, in response to that, may I say that when I was shadow Secretary of State for several years, GPs consistently told me that if only they were given the responsibility, they could do it so much better than primary care trusts? So we gave them the responsibility in ways that were very like the locality commissioning that was the endpoint of the GP fundholding of the noble and learned Lord, Lord Clarke of Nottingham. To be fair to them, there was less money, but no sooner did they take this responsibility than NHS England said, “Hang on a minute, you’re not doing what we’ve told you to do.” It took about 18 months, perhaps slightly less, before NHS England effectively said, “You have no further autonomy. You’re going to be in the sustainability and transformation plans,” which are the forerunners of ICS. I do not think that the clinical commissioning groups ever got the chance to do what they were asked to.

We have now reached the point where, as the noble Lord, Lord Warner, rightly says, they are being written out of the script, but they are not complaining, which is very interesting. They are not complaining because they do not want to be responsible for the budgets; they want to be responsible for the patients. They always said that they wanted to decide how locality commissioning should be done and the good ones have put tremendous things in place in terms of population health management, patient pathways and commissioning linked to those patient pathways. That is why, if we can do something with this Bill, it is to retain all that locality commissioning with GP input. But be prepared for the ICS, the big battalions, to go away and fight with the barons in the big hospitals.

[Baroness Thornton (Lab)]

I wish you good luck.