Lord Maude of Horsham debates involving the Cabinet Office during the 2019 Parliament

Mon 28th Nov 2022
Wed 25th May 2022
Procurement Bill [HL]
Lords Chamber

2nd reading & 2nd reading
Wed 30th Dec 2020
European Union (Future Relationship) Bill
Lords Chamber

3rd reading & 2nd reading (Hansard) & Committee negatived (Hansard) & 3rd reading (Hansard) & 2nd reading (Hansard) & 2nd reading (Hansard): House of Lords & 3rd reading (Hansard) & 3rd reading (Hansard): House of Lords & Committee negatived (Hansard) & Committee negatived (Hansard): House of Lords & 2nd reading & Committee negatived
Wed 18th Mar 2020

Permanent Secretaries: Appointment and Removal (Constitution Committee Report)

Lord Maude of Horsham Excerpts
Thursday 9th May 2024

(1 month ago)

Grand Committee
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Lord Maude of Horsham Portrait Lord Maude of Horsham (Con)
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My Lords, not that many people are deeply interested in this subject—in essence, we are all in the Room—but, for some of us, this is a subject of deep concern and is hugely important. I very much welcome the Constitution Committee’s thorough, balanced and thoughtful report.

This subject is gaining more interest outside. It is interesting that today the Institute for Government has published yet another report that bears strongly on this subject. It is robust and pretty punchy and it supports a lot of concerns that many of us have felt for a little time. It was a pleasure to be invited to give evidence to the Constitution Committee; it was yet another stage in my therapy and I am grateful for that opportunity.

I want to make some general points. First, I pick up the point made by the noble Baroness, Lady Drake, about opacity—that is, the opaqueness of this process— and the lack of scrutiny over internal appointments in the Civil Service. This is a matter of deep frustration for Ministers, who often see appointments being made for posts that are very important for the work that they are charged with delivering yet they have little visibility, let alone influence, on how the appointment is made. When I was doing my review, which I found a fascinating process, I discovered, buried deep in the Civil Service Management Code, these words:

“Ministers … will have a legitimate interest in a small number of posts”.


I found that extraordinary. As a Minister, I felt that I had a legitimate interest in every single post in the department for which I was responsible. I might want to exercise that interest and influence over only a relatively small number, but the idea that Ministers have a legitimate interest in only a small number is quite offensive. That needs to be revised.

There is no effective scrutiny from outside of internal appointments. That is needed. A body that has already been set up is capable of being developed into such a body: the Civil Service Commission, whose role can be expanded by agreement with the Prime Minister and the Civil Service Commissioner. At the moment, it is not set up to do that. As the report makes clear, its independence is somewhat truncated because all its staff are themselves civil servants.

I pay huge tribute to what the noble Baroness, Lady Stuart, has done as the First Civil Service Commissioner. It is interesting that she is the first former Minister to sit as a Civil Service Commissioner, yet that ministerial perspective is important when you are looking at the appointment of very senior civil servants. In my recommendation, there should always be two former Ministers, one from each of the major parties, on the Civil Service Commission—partly to ensure that there is no politicisation, in the sense of people who would not be acceptable to an incoming Government of a different colour being appointed to key posts, but also to bring that ministerial perspective to judgments. Reference has been made to the strange and uncertain role of the Senior Leadership Committee, which needs to be brought into the daylight.

Then there is this question of merit. I have no problem with appointments being made on merit. Why would any Minister want a key official who is charged with delivering their agenda not to be of high merit? But who is to be the judge of merit? There is no objective test for it; these are human judgments being made by human beings about other human beings. There is absolutely no reason why Ministers should not be able to be part of judging the merit of particular appointments, as they already are for Permanent Secretaries and directors-general, and to be given a choice of appointable candidates of sufficient merit for roles that they consider critical for the discharge of their responsibilities. If this were to happen, it would likely reduce the amount of blame that tends to get attached; if Ministers have more involvement in the appointment of civil servants, they will have less justification for criticising them when things go wrong.

One reason why things sometimes go wrong is that civil servants in very senior roles, including Permanent Secretaries in charge of big delivery departments— the IfG’s report today makes this clear—are predominantly drawn from the policy side of the Civil Service and are, frankly, woefully underprepared for taking on these huge responsibilities. My hopeful attempts to introduce a much higher degree of training for these big roles ran into the sand. For reasons which no one has ever explained, what we agreed should be done—putting Permanent Secretaries and aspirant Permanent Secretaries through top leadership courses in top business schools—just did not happen.

Ministers need to be able to be more involved in more appointments and should have more visibility. I do not understand why it is said that there cannot be a role for special advisers in observing the selection process—not being involved in it or influencing it, as the law is quite clear that they must not be involved in management. Them having some ability to see what is happening, and to throw some light on these very mysterious and opaque processes, would be very valuable. Nothing in law or good practice prevents that.

The IfG report makes the point that the pay of senior civil servants has fallen. It should be higher and we should have a smaller Civil Service with better pay, particularly for senior officials and Ministers—I can say this because my ministerial career is now, happily, well behind me. It is not appropriate that Ministers, who carry all the responsibility and accountability for what is done by their department, are served by officials who in many cases are paid more than them. It is very difficult, but it should be dealt with. Ministerial pay has fallen far further behind than civil servants’ pay.

There have always been Permanent Secretaries being removed. Fixed terms have not particularly increased this, as they can be extended—and generally should be—for less than the five years. When civil servants leave because there has been a failure in the relationship, we should be unequivocal and unembarrassed about paying up. When there is a failure, it is often not a personal failure of the individual—maybe it was the wrong appointment or, as I have said, they were insufficiently prepared. We should take responsibility for that and ensure that they are properly paid. The idea that you cannot reward failure is pandering to media concerns. We should be much more grown-up about this and accept that sometimes these things happen. There should be proper process. It should be unusual, but when it happens you should pay up and accept that there is a general responsibility for it having happened.

I strongly commend the report of the Constitution Committee, which is a very worthwhile piece of work.

Procurement Bill [HL]

Lord Maude of Horsham Excerpts
Lord Maude of Horsham Portrait Lord Maude of Horsham (Con)
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My Lords, I have a very specific point to raise by way of reassurance. It is clear from the debate so far that these are complex areas that are particularly complicated because of the interaction between this Bill and the previous Health and Social Care Act; I wish my noble friend the Minister well in disentangling that and making it all clear to your Lordships.

My concern is around the provisions as they affect public service mutuals. This programme has always had cross-party support. It began under the Labour Government in the Tony Blair years, specifically in the NHS. It was then taken up enthusiastically by the coalition Government. I led the programme with the support of Liberal Democrat colleagues, in particular the noble Lord, Lord Wallace of Saltaire. This was a programme where, in particular services right across the public sector, groups of public sector workers were able to spin themselves out of the public sector and form themselves into employee-owned and employee-led entities. They then provided that service, whatever it was, to what was in effect the contracting authority under a negotiated contract.

Technically, this is procurement and, in good practice, should be subjected to a competitive tender. Indeed, we had some difficulty with the then EU public procurement regime that made it legally impossible to do this. I was able to negotiate with Commissioner Barnier a change to the EU procurement directives, which enabled a mutual to spin itself out without a competitive process for a relatively limited period before being subjected to a retendering process.

This was a very benign programme. Mutuals that spun themselves out demonstrated almost overnight a dramatic improvement in productivity—something close to 4% annually. More than 100 of them spun out. The largest number came from the health and social care sector. They did not have to do this but nearly all of them—certainly all the ones from the health and social care sector—chose to be a not-for-profit, social enterprise.

They brought together four powerful elements. The first was entrepreneurial leadership. The second was an empowered and liberated workforce. The third was commercial discipline, in the sense that they would all talk about themselves as a business even if they were a not-for-profit; that commercial discipline was crucial. The fourth element was the public service ethos. Bringing all that together created a powerful alchemy that delivered improvements in efficiency. Costs were able to be reduced, there was a reduced fee basis through the life of a contract and quality improved.

Staff satisfaction also improved enormously. Whenever I visited these mutuals, I always asked people whether they would go back and work for the NHS, the council, the Government or wherever they had come from. I never heard anyone say anything other than an immediate “No”. When asked why, they would all say something like, “Because now we can do things. We’re freed from bureaucracy. We’re freed from constraints. We can make things happen quickly”.

So my question for my noble friend the Minister, to be answered whenever she is able to do so, is whether she can provide some reassurance that the arrangements in the complex interaction between this excellent Procurement Bill and the Health and Social Care Act will, if the Government wish to accelerate this programme again, allow such arrangements to be negotiated directly between the contracting authority and the emerging spun-out entity without the need to go through a competitive process.

Lord Wallace of Saltaire Portrait Lord Wallace of Saltaire (LD)
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My Lords, we will return to the question of not-for-profits, mutuals and social enterprises in group 6, when we have Amendments 41 and 123 in my name and the name of my noble friend Lord Fox. I very much hope that we will have the support of the noble Lord, Lord Maude, on that. There was, in the Green Paper where we started this process, a very strong emphasis on the useful role that non-profits and social enterprises would have. That has disappeared from the face of the Bill. We wish to make sure that it reappears.

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I hope that my noble friend can respond positively to the strategic priorities in Amendment 47. I look forward to hearing what she has to say. However, if it is not sufficiently positive, I may need to test the opinion of the House on Amendment 47.
Lord Maude of Horsham Portrait Lord Maude of Horsham (Con)
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My Lords, I draw attention to my interests as set out in the register. I am co-owner of a company that provides advice to Governments outside the UK on issues of public sector reform, including procurement—a subject that is not dear to very many people’s hearts but is to mine. I am delighted to have the chance to speak on this important group of amendments.

I assume that it is accepted everywhere that the primary purpose of good procurement law and practice is to ensure that the goods and services being procured provide excellent value and the best quality for the money. That trade-off between the two should always be primary. The various objectives and principles that are adumbrated in the amendments tabled by my noble friend Lord Lansley, and the noble Baronesses, Lady Hayman and Lady Worthington, are all excellent. I mean no offence when I say that they are motherhood and apple pie. No one would be against any of them, they are good things. The question is the extent to wish you should build into law the obligation for these to be taken into account in the ways laid out in the various amendments.

My noble friend Lord Lansley referred to the Public Services (Social Value) Act 2012, which I was very glad about as I was the Minister responsible for it. It was a Private Member’s Bill in the other place, but I was very happy that the Government supported it and saw it into law. It was very much a permissive Act. The objective was to make it clear that procurements were not to be just an arithmetic exercise looking at the pure financial value of bids but that you could look at wider social value.

However, when the coalition Government was formed in 2010 and we started to look at how procurement was being done, procurement policy was being used as a sort of Christmas tree on which many different policies were being hung. My recollection is that there were something like 11 different policies. All of them were very good. None of them was something we did not want to take seriously or thought did not matter. There were environmental and social policies, and others concerning training and apprenticeships; a whole range of interesting and good objectives. I have to say that we fairly ruthlessly stripped them out because, like now, the Government had a significant budget deficit and it is essential that primacy must be given to value for money. So we stripped them out, but that was not in any way to suggest that those factors could not be put into a request for proposal—RFP—or tender document, in the way that a number of your Lordships want to see happen on a routine basis.

The key to this is bespoking. There will be many cases where the inclusion of wider requirements makes sense and will not skew or bias a particular procurement in a way that damages its value for money—but there will be some where this is damaging, and this must be addressed close to the chalkface by those who are doing the procurement. As I said at Second Reading, the key is practices, and getting experts in procurement involved at an early stage so that the procurements can be devised in a way that supports the policy objective. Too often that does not happen. The problem with introducing broad, overarching requirements or even policy statements into the approach is that these get baked in at the policy development stage of a project, and that can then jeopardise and get in the way of the project’s effective implementation.

This leads to a broader point. It is essential that those charged with implementation of projects, programmes and policies—implementation professionals with the necessary expertise in procurement, project management, IT and digital, financial management and HR—are involved at the policy development stage. Far too often, that does not happen. That is the stage when advice can be taken and a procurement devised and formulated in such a way that these desirable other policy objectives can be addressed, but in a way that is proportionate and appropriate in the circumstances.

It seems to me that that is the reason for having that flexibility. The noble Baroness, Lady Hayman, said that the words of Ministers can be warm, encouraging and good, but there is nothing like having good, strong law to bake it in. The problem is that this can be counterproductive. We all know the reality, and it is clear from this debate that procurement is difficult, complex and technical. If it is so for those of us who are here making the law, then it is pretty difficult, complex and technical for those trying to bid for contracts from the public sector. The more complexity and legal rigidity we build in at this stage, the greater the ability of the established universe of vendors and suppliers to freeze out newer, smaller ventures from effectively bidding for and winning these important contracts.

When procurement law becomes too rigid and prescriptive, frankly, it can enable established vendors to present some of the characteristics of an oligopoly. We saw this 15 years ago, particularly in the world of public sector IT contracts. It is really important that we bear this in mind.

A little later, in group 6, we will debate the government amendment that rightly requires contracting authorities to take account of the needs of SMEs, which I wholly welcome. In an earlier debate, the noble Lord, Lord Wallace of Saltaire, mentioned the desirability of including the needs of social enterprise, to which I am very sympathetic, for all the reasons we discussed earlier.

However, the fact is that, the more prescription and rigidity in the law, the greater the scope for the big beasts in the supplier market to use their financial muscle and heft to squeeze out the smaller vendors through judicial review in the courts. Some of them are very trigger-happy in this respect. It is often the smaller, newer vendors who bring the most dynamism and innovation and are most able to bring quality and good value to the needs of delivering services and providing goods for citizens.

While recognising the good values and intentions that lie behind this desire to load all these additional factors on to procurement law and make them explicit, my counsel is that we should tread with very great caution. I do not find myself able to support these amendments.

Baroness Noakes Portrait Baroness Noakes (Con)
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My Lords, I will offer a few general observations. I do not have any amendments in this group, and I will echo some of what my noble friend Lord Maude has just said.

I will make four points. First, I see little point in duplicating in this Bill what is already on the statute book. We have already referred to the Public Services (Social Value) Act 2012. This deals with social value and does not need to be repeated in the Bill. That applies to other matters as well.

Secondly, lists of noble Lords’ favourite topics, such as climate change and innovation, run the risk of accelerating the Bill’s obsolescence. This is the case even if lists are drafted in a non-exhaustive form. The list itself provides context for interpreting the statute at a later stage. Those interpreting the legislation will look at what Parliament’s intention was when we passed it. The sorts of things we put in now will help determine the framework within which that judgment is made.

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Baroness Parminter Portrait Baroness Parminter (LD)
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My Lords, I add my support to the noble Baroness, Lady Worthington. There is disunity in Horsham tonight: I disagree strongly with the noble Lord, Lord Maude of Horsham. I went to school in Horsham and was on the council there. However, I take a different view from the noble Lord about the role of procurement.

He talks about procurement’s sole purpose being good value. He went on to say that it is “motherhood and apple pie” to have value-driven public procurement policy, but I argue that it is not. That is the point of procurement: to marry good value with being value-led. Why be in government if you are not using all the levers at your disposal—regulation, fiscal incentives and disincentives, and procurement, with its massive spend—to deliver the values your Government want to deliver?

Baroness Bloomfield of Hinton Waldrist Portrait Baroness Bloomfield of Hinton Waldrist (Con)
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I remind the House that noble Lords may speak only once on Report.

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Lord Maude of Horsham Portrait Lord Maude of Horsham (Con)
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My Lords, I support government Amendment 40. This is very worthwhile. I am also very sympathetic to Amendment 41, tabled by the noble Lord, Lord Wallace of Saltaire. The reality is that not-for-profits, social enterprises and mutuals, when they come to retender or bid for different contracts, because a number of mutuals we supported have grown, both by expanding into different areas for the same group of clients but also by expanding into different geographical areas for different public authorities—and this is very worthwhile—but they are subject to very much the same kinds of constraints that the conventional procurement we inherited in 2010 imposed on SMEs.

I take slight issue with the noble Lord, Lord Wallace. I do not actually believe that there is a conflict between this approach—working to remove barriers to SMEs, social enterprises and so on participating in, bidding for and winning government and public sector contracts—and achieving better value and supporting the aims of the free market. When we went down the path, in the coalition Government, of setting an aspiration of 25% by value, at that stage, of public procurement going to SMEs, the immediate response from the conventional wisdom was, “Oh, that means you’re going to abandon best value; you’re going to have to effectively subsidise SMEs”. Precisely the reverse was the case. Opening up procurement got rid of some ridiculous requirements that were not necessary at all but were imposed by safety-first procurers: for example, that bidders should have to show three years’ audited accounts and that there should be turnover thresholds, performance bonds and requirements to show that they had in place the insurance to cover the contract value before they even bid.

The combination of all these things meant that many SMEs and start-ups and some of the most innovative, competitive and dynamic potential suppliers were simply not able to get into the marketplace at all. So there is no conflict between value for money and opening up to smaller businesses: the two objectives go absolutely hand in hand. So I strongly support the amendment the Minister has brought forward, but I urge her to look sympathetically at Amendment 41, because social enterprises, not-for-profits, mutuals and so on suffer from exactly the same disadvantages and obstacles as there were in old-fashioned procurement and it is important, I believe, that they should be included in the same bracket.

Baroness Noakes Portrait Baroness Noakes (Con)
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My Lords, I have Amendment 164 in this group, to which my noble friend Lord Moylan has added his name. Before turning to that, I echo what other noble Lords have said in thanking my noble friend the Minister for her amendments on SMEs. I am very glad that she has taken into the Cabinet Office the evident passion she demonstrated for the cause of SMEs when she took part in Committee on the Bill. Of course, there is no one silver bullet that is going to solve all the problems of SMEs engaging in public procurement, but I believe that most of the amendments before us here will contribute to an important advance in that area.

I have a concern about Amendment 134, which is one of my noble friend’s amendments. It keeps the new Clause 11 duty out of the enforcement clause, Clause 92. That is a pity, because it means that SMEs, which think that that duty is not being complied with, will have to fall back on judicial review—and, as we know, judicial review is not a practical remedy available to SMEs. I regret that. I similarly regret Amendment 140 in relation to procurement oversight recommendations, and I hope that the Government will have an opportunity to think again about both those areas when the Bill moves to the other place.

My Amendment 164 is aimed at the same target as Amendment 163 in the name of the noble Baroness, Lady Bennett of Manor Castle, who was not in her place when the debate started earlier this evening. I was expecting the noble Baroness, Lady Bennett of Manor Castle, to explain the amendment, and then I was going to come in behind it. They are both sourced from an amendment suggested by the Local Government Association. It concerns Section 17 of the Local Government Act 1988 and the exclusion of non-commercial interests that is required by that section. Clause 107 allows regulations under this Bill to disapply that duty for below-threshold contracts. The issue raised by the Local Government Association was that that should not be just permissive but should be an absolute requirement.

The noble Baroness, Lady Bennett of Manor Castle, tabled an amendment in the form originally suggested by the Local Government Association. I have been around a little longer than the noble Baroness, Lady Bennett of Manor Castle, and have debated may/must amendments in relation to whether regulations should be obligatory or permissive. It is a good technique for discussing issues in Committee, but when we get to the sharp end of the business of legislation, the Government always resist a regulation-making power being obligatory—and for good reason, because it ties the hands of today’s Government and any future Governments. I accept that, and I am sure that the Opposition Benches who may want one day to be making legislation of their own would accept that as well. So I retabled the concept of the amendment by inserting below-threshold contracts into the list of things that could be done with this power, in the hope not that my noble friend would accept the amendment but that she would give a clear commitment at the Dispatch Box today to use the regulation-making power at the appropriate time to ensure that below-threshold contracts are excluded from the ambit of Section 17, as I mentioned. I look forward to hearing what the Minister has to say.

Procurement Bill [HL]

Lord Maude of Horsham Excerpts
2nd reading
Wednesday 25th May 2022

(2 years ago)

Lords Chamber
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Lord Maude of Horsham Portrait Lord Maude of Horsham (Con)
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My Lords, it is a pleasure to follow the noble Lord, Lord Alton. I start by drawing attention to my entry in the register of interests, particularly my majority shareholding in FMA, a company that supports the implementation of reforms for Governments outside—I stress “outside”—the United Kingdom; this includes supporting them on the reform and operation of their procurement systems. I should also draw attention to the 2020 review that I conducted pro bono for the Government, the Cabinet Office and the Treasury on cross-cutting functions across the British Government, including the commercial and procurement functions.

There are not many people for whom public procurement is a subject that sets the pulse racing, but they are all here in the Chamber. For those of us who have lived and breathed this subject, it is a pleasure to speak on it and welcome the Bill that my noble friend the Minister has introduced.

A number of contributions so far have pointed to things that noble Lords would like to see in the Bill but are not in the Bill. My concern is slightly in the other direction. I would prefer the Bill not to be too constraining and restrictive because I have observed that it is possible to have perfect procurement law and terrible procurement outcomes, and really bad procurement law and much better procurement outcomes.

The legacy regime includes the EU’s public procurement directives, the first iteration of which I was involved in negotiating way back in the 1980s. They became somewhat more convoluted subsequently, it is fair to say, but they were not terrible. Yet, in 2010, when the coalition Government were formed—the noble Lord, Lord Wallace of Saltaire, will remember this—we discovered a horrendous legacy of dreadful contracts that the Government had entered into right across the piece. Our task, which was to drive out cost from the overhead running costs of government, involved us renegotiating many of those contracts and making substantial savings very quickly. However, it was not the fault of the law, which was not bad at all; it was all about the way in which the laws were being operated. Through the efficiency drive we led at that time, with enormous support from our coalition partners in the Liberal Democrat party—particularly Danny Alexander, the then Chief Secretary, and the noble Lord, Lord Wallace—we made savings, cumulatively over five years, of some £52 billion, essentially from the running costs of government.

So the law is not the most important part of government procurement. I urge your Lordships, as this Bill goes through its time, to resist the temptation that there will certainly be—we have heard some of this so far—to add things to it. At the end of it, procurement is primarily, although not exclusively, about buying goods and services that are needed to serve our security and citizens in the most effective way. That is about quality and cost and requires good practices; the practices have not always been good.

When we came into government in 2010, I discovered that the time taken for formal tender processes to be completed was double what it was in Germany. The rules were followed properly yet the time taken was, on average, twice as long. We made changes and cut the time for British procurements to half of Germany’s average time, all without making any changes to the law—that is, just by reforming practices. Suppliers would tell me that it cost them four times as much to bid for public sector contracts as it did for private sector contracts.

There are two malign effects of that. One is that the extra costs involved in bidding for such contracts get put on to the price bid, and the taxpayer picks up the tab for that. The second, of course, is that the extra costs and the restrictive practices which are completely unnecessarily incorporated into so many procurements mean that smaller and younger vendors are often—generally, actually—frozen out. Just in the field of IT and digital, we found that 87% of the Government’s spend on IT was with seven vendors, all multinationals.

One of the problems with building a really successful tech sector or ecosystem in the UK was that vendors had no, or very little, opportunity to bid for and win public sector contracts due to a combination of turnover thresholds, the routine requirement for companies to show three years of audited accounts, the requirement to show that you had insurance in place to cover the cost of the bid at the time of bidding, often huge performance bonds, and excessively complicated pre-procurement questionnaires—none of which was necessary under the law. All were avoidable but they had the effect of freezing out smaller, newer, and often more dynamic and innovative, suppliers. My noble friend Lord Lansley is quite right to say that supporting innovation is not the purpose of procurement, but innovation can be incredibly important in making procurement more effective and enabling newer ideas to come to the service of the country. It is really important that that should happen.

Within the constraints of the EU procurement regulations and directives, we exceeded our aim of 25% of government procurement by value going to SMEs. Understandably, we were not allowed to discriminate in favour of UK suppliers but, of course, SMEs are much more likely to be local and UK-based, and that was a big part of supporting the supply side of the economy. There was a tendency for too many contracts to be large—huge—multi-year contracts which smaller businesses were unable to bid for.

On central procurement, I found that there were 800 people employed at the centre of government—at that stage, under the aegis of the Treasury—yet they could not tell me who the 20 biggest suppliers to government were. We had to guess at that, write to the chief executives of the companies we guessed were the biggest suppliers, and invite them to give us full transparency, or full visibility, over it. Of course, there are huge savings to be made by central procurement, for the whole of government, of commodities, goods and services. However, as the noble Lord, Lord Fox, rightly said, when you try to do that—we succeeded in making some limited progress down that path—it is amazing, with the rich vein of creativity you tap into, to hear the reasons why it cannot possibly be done. People say, “We totally agree with it in principle. It makes very good sense, but our needs are completely unique and distinctive”, and exceptionalism becomes a religion. Again, the law does not operate on that area—these are operational decisions to be made by the Government when it comes to implementing and executing this law.

This brings me to the most important part—the people who operate procurement. There are three parts in any procurement: pre-tender market engagement, the formal tender process and post-award contract management. However, in most Governments, it is the middle part of that—the formal tender process—which attracts all the attention. Just as in the world of defence and security there is a class of public servants we affectionately know as “securocrats”, I came to know the people—often many people—who work in procurement, and I fondly refer to them as “procurocrats”. They are people for whom process is king, and for whom process will always trump the outcome. They thought that if they could say that they followed the process, even if it arrived at a stupid outcome with poor value for money, no one could criticise them.

You need to have commercial DNA injected into public procurement so that the pre-tender market engagement can be done in a confident and knowledgeable way, and therefore to frame the procurement tender in much more effectively. The process of tenders is often embarked on too early, without real knowledge of what you are trying to achieve or what it is possible to achieve, and then of course you get into endless alterations and changes to the procurement, which is where the suppliers make their money. Some suppliers told me that changes in the operation of a contract could deliver them a rate of return of 40%. Then there is post-award contract management, which we discovered was weak across the Government. Again, that is where the suppliers were too often making too much money.

It is that lack of experienced, confident, commercial operators inside government that often leads to these problems. I would sometimes hear procurement people in government saying, “But, Minister, we’re not allowed to exercise judgment”. What? Surely that is what we pay them for. The danger of excessively prescriptive procurement processes is that the focus is all on just buying what looks like it is cheapest so that no one can criticise you; it is just about the maths. If you have not allowed innovative vendors to look at new and different ways of delivering the goods or services, it just boils down to whatever is cheapest—and that is a bad outcome for the Government and the taxpayer.

The National Audit Office and the Public Accounts Committee fulfil an important function but cast a long shadow, and officials can become nervous of exercising judgment and not going for what looks like the cheapest option, for fear that they will subsequently be taken to task. That is one reason why the role of departmental boards can be so important. Strong and experienced commercial non-execs on those boards can support officials in exercising judgments effectively.

I submit that the professionalisation of the procurement function is more important than the precise letter of the law that we are debating today. I believe that a full assessment of the commercial function is now nearly complete, with accreditation of those professionals and support for those who fail to meet the standards to meet them subsequently.

On the Bill itself, I urge the House not to make the mistake of thinking that the law is the only thing that matters. Of course, it is important and necessary to replace the EU regime, but I urge us not to import into it more and more changes that make the Government a prisoner of the process. Some changes were made under the law to require pre-procurement questionnaires to be much more standardised and unified, supporting smaller companies to be able to bid for and win these contracts. I support the single digital platform, which builds on the Contracts Finder website that was created, and the transparency.

The noble Baroness from the Opposition Front Bench talked about the absence of references to social value in the Bill. Unless I am mistaken—perhaps the Minister can deal with this when he closes the debate—the social value Act of 2012 has not been repealed and is still in existence. It allows social value to be incorporated in procurements on a permissive basis.

The debarment register is welcome. It is important for procurement-contracting authorities to be able to look across the piece at the track record of suppliers, not just at what has been done with that particular contracting authority. We sometimes found ourselves obliged to give contracts to companies that were suing the Government, and I know of no other commercial organisation where that would be regarded as remotely accessible.

So I commend the Minister for the elegant way in which he has recommended this Bill and I look forward to discussing it in the course of its passage through the House.

Government: Leadership Training

Lord Maude of Horsham Excerpts
Thursday 16th September 2021

(2 years, 9 months ago)

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Lord Maude of Horsham Portrait Lord Maude of Horsham (Con)
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My Lords, I declare my interests in the register, particularly my chairmanship of FMA, which provides support to Governments outside the UK on public sector and efficiency reform.

I congratulate my noble friend Lord Norton on securing this debate, which is very timely. What better day to be debating the need for training Ministers than when the reshuffle has just happened and a raft of new Ministers are taking up their posts? I recall, in the early days of the coalition Government, a Minister from our coalition partners, the Liberal Democrats, describing how he felt that he had been parachuted deep behind enemy lines with no map, no compass and no one to give him support in how he should execute the quite senior office to which he had been appointed. I have believed for a long time in the need for Ministers to have support and training.

Before the 2010 election, when I was leading the work of preparing the Conservative Party for the possibility of being in government, we drew on the activity that the noble Baroness, Lady Taylor, described. We organised a number of sessions; we wheeled out some of the old warhorses, such as my noble friend Lord Heseltine, with a reputation for knowing how to get things done in government. Subsequently we organised, on a very informal basis, some induction sessions after each reshuffle for new Ministers—but it was voluntary and not as well organised or as rigorous as it should have been. I deeply believe that this is really important.

The Institute for Government—IfG—supported the work that we did before that election and afterwards, and it can play an important role in this area. I am delighted to say that the Major Projects Leadership Academy, based in the Saïd Business School at Oxford, which we set up in 2012, now has a programme for Ministers, where they spend eight one-hour sessions over an eight-week period learning about many of the things that my noble friend Lord Norton has described: the need to articulate a vision and knowing how to turn that vision into reality. That is a positive development, but again I think it is voluntary when it should not be so.

The second part of my noble friend’s Motion, civil servants, are something with which I have had a great deal to do. For five years in the coalition Government I had responsibility in the Cabinet for the Civil Service, and I have a few reflections coming out of that. The first is that in the Civil Service we still have a class divide. There is a white-collar class of policy mandarins, to use the word, who basically sit above the salt and essentially have a stranglehold on the top jobs, and then there are the blue-collar civil servants who are specialists in finance, procurement, IT and major projects but rarely get the top jobs. There is not parity of esteem, something that we must work towards. We need to have the scope for civil servants who have skills and much-needed capability beyond the ability to provide analysis and policy support, and they need to have at least as good a chance of securing those top jobs.

Some 53 years after the Fulton committee report, there is still too much of the cult of the gifted amateur. My noble friend referred to generalists; that is another way of putting it. It is not that they are not gifted; many of them are extremely gifted and many very professional, but we still appoint people into very responsible posts—Permanent Secretaries of departments with budgets of tens of billions of pounds—who are woefully underprepared, and then we complain when they fail.

I tried to address this issue by starting a programme where younger Permanent Secretaries with a period ahead of them would attend top leadership courses at the best business schools in the world, where they would mingle with people from other sectors, including the private sector. These courses at Stanford, Harvard, INSEAD and others are incredibly valuable. I was told by the then Cabinet Secretary that we could not justify the cost because they cost $70,000 or so. These are people who we are putting in charge of tens of billions of pounds a year, but I was told that the Daily Mail would not wear it. My response was, “If they want to have that argument, bring it on. I’m very happy to make the case for making this investment in the people we are asking to take on these roles.”

We eventually got agreement that this would happen about 18 months before the 2015 election. I was consistently told that it was happening and all under way. By the time the election happened and I moved on, instead of 10 Permanent Secretaries going through three months at Harvard, Stanford and INSEAD, one Permanent Secretary, my own, had done one week at IMD in Lausanne. He said, “Minister, it was good, it was fine, but it wasn’t what you had in mind.” I have never understood why there was such resistance to giving these people, on whom we make such important demands, the support and backing they need to be able to undertake these public responsibilities.

We owe my noble friend a serious debt for drawing attention to the need for us to step up a good deal on this subject.

European Union (Future Relationship) Bill

Lord Maude of Horsham Excerpts
3rd reading & 2nd reading & Committee negatived & 2nd reading (Hansard) & 2nd reading (Hansard): House of Lords & 3rd reading (Hansard) & 3rd reading (Hansard): House of Lords & Committee negatived (Hansard) & Committee negatived (Hansard): House of Lords
Wednesday 30th December 2020

(3 years, 5 months ago)

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Lord Maude of Horsham Portrait Lord Maude of Horsham (Con) [V]
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My Lords, I congratulate my right honourable friend the Prime Minister, and the whole negotiating team in the Government, on achieving this deal. It is not perfect and could never have been perfect; the cake was never available to be had and eaten at the same time. But it is a remarkable achievement to have done this in such a short space of time. I spent much of my early ministerial career negotiating the UK’s way into the European single market during the late 1980s. I know better than most how slow, painstaking and meticulous that work was, but also how fractious the relationship frequently was.

Yes, this is a thin deal, as some have said. It does not cover services, but we know that the single market for services was far from complete, especially for financial services. We know that it does not cover mutual recognition of qualifications, but that does not immediately mean that professional qualifications will not be recognised. The same applies to conformity requirements.

The point has been made by a number of your Lordships that much work remains to be done. This is not the finished article, and it never will be the finished article. It should not and cannot be, because the world is changing, and technologies are changing. This has to be a dynamic relationship that adapts as time goes on to the needs, possibilities and challenges of the moment. If anything has shown how important the need to be agile and adaptable is, it is the dreadful experience of 2020. It shows how unexpected events can throw out what has been foreseen, but also throw up opportunities and challenges.

There is a great deal more to be done. I personally believe that there is an opportunity for the relationship to be taken forward in a better spirit than there was for much of the time when we were a full member of the European Union. We were never committed in the way that other countries in the European Union have been. Some noble Lords talked about Britain being at the centre of Europe—we never were at the centre of the European Union, nor could we ever have been. We were an important contributing member in many ways, and all the ways in which we can continue to contribute to and benefit from that close relationship with our European neighbours and friends remain available to us in the future. I hope that will be the spirit in which we enter into this next epoch in our nation’s life.

Budget Statement

Lord Maude of Horsham Excerpts
Wednesday 18th March 2020

(4 years, 2 months ago)

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Lord Maude of Horsham Portrait Lord Maude of Horsham (Con)
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My Lords, I draw attention to my interests in the register, including as co-founder of a start-up with my noble friend Lady Finn.

It is a great pleasure to follow the noble Lord, Lord Brooke. He and I had dealings some 30 years ago when I was Financial Secretary and he was leading the Inland Revenue Staff Federation. He was calm, courteous and moderate then, as he is in your Lordships’ House today. Thinking about that time, it was said after the Chancellor’s Budget last week that this was the biggest fiscal stimulus since the Budget in 1992, introduced by my noble friend Lord Lamont. Looking at the Red Book from that time, issued in my name as Financial Secretary, my noble friend reminds me that the fiscal stimulus then amounted to some 0.25% of GDP, whereas last week it was a heroic 1% of GDP.

Of course, that has been made to look nugatory in the face of what has happened since then because that Budget inevitably has been very much overshadowed by the necessary and desirable response to the intensity of the Covid-19 crisis. This is troubling for a fairly unreconstructed smaller state, sound money Conservative, but these are utterly extraordinary circumstances and so an utterly extraordinary response is required. Last week, long-term decisions were made in the Budget on investment in infrastructure and spending more generally, while short-term palliative measures were introduced earlier this week. A different approach is required for each, but in both cases, the huge increase in spending makes it more necessary to focus on how the money is spent. I have some general points and some specific ones.

On the general points, our experience from the coalition Government is that a lot of money spent by Government is not spent very well. By dint of applying some disciplines that are commonplace in successful businesses but very uncommon in government, we were able to save from what are essentially the running costs—the overhead costs of Government—some £52 billion over those five years cumulatively, one year added to another. Some of the reforms we introduced persist, some have advanced, while others have regressed, and I am delighted to see that the role of my noble friend the Minister is to accelerate those reforms. It is necessary for him to be successful because it is his job to ensure that public money is spent well. It could be easier than it might have been because it has been shown that it can be done. However, it will be more difficult because when there is a sense that the sluice gates have been opened, it is tougher to persuade the spending Ministries to accept the centrally imposed disciplines that are essential to drive the effort successfully. I wish him every good fortune in the task he has taken on.

I come now to what we all hope will be the short-term measures that have been introduced to address the effects on the economy of Covid-19. We do not know what they are yet, but they will be severe in the short term, and immediate. One of my daughters had a part-time job in the hospitality sector while she undertakes a course of study, but she no longer has that job. There will be many people in those circumstances. She is being protected by the Bank of Dad, but many more are not in that position. The effects of all of this are very immediate. Further, while this may be surprising in view of what I was saying earlier, it is important that the Government should not be too fussy about trying to ensure in advance that all of the money is spent perfectly. It will not be because speed trumps everything else in this regard and getting the money out of the door.

How should that be done? A number of noble Lords have spoken of increasing the amount of leverage, the amount of debt in our economy, which is a real and genuine concern. I have a great deal of sympathy with the argument made by the noble Lord, Lord O’Neill, about whether this is the moment to print money. Some 30 or 40 years ago, that would have been anathema to us all, but we have seen in the response to the global financial crash that quantitative easing—printing money, as we used to call it—did not unleash inflation in the way that we feared. I think I heard the noble Lord say on the radio earlier this week that if we suddenly see a burst of inflation, that would be a quality problem for us and we could deal with it.

I have a couple of questions for the Minister about the measures that were announced a couple of days ago. On insurance, we have heard different things about the effect on business. Will those who have cover for these circumstances be able to claim on their normal business interruption insurance? An answer on that would be welcome.

What of the economy as we emerge from this crisis? There will be effects, and some of them may not be bad. As an economy and as organisations, we should be much better at organising and managing people remotely. There are huge benefits if more people work from home, which means being more sophisticated in how they are managed, managing them by output rather than by presenteeism. That can be a massive boost to productivity if we learn the lesson well of making a virtue out of necessity.

We used to talk in the coalition government about the big society, and we were sometimes mocked for that. However, the reality is that while the Government have an absolutely indispensable role in addressing the challenges that come out of this dreadful crisis—this dreadful virus—there is an enormous amount that people can do, such as working with each other in organisations, supporting each other, although less so physically. Thank God for the internet and for the connectivity that enables people to support and connect with each other without being physically present. The damage that would be done without that would be intensely worse. Therefore, there are potential benefits to come out of this. These are dark clouds indeed, but let us make sure that when the silver linings emerge—they may just be flickering—we do not waste them.

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Lord Agnew of Oulton Portrait Lord Agnew of Oulton
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To reassure the noble Baroness, most of that burden will have fallen on the higher-income taxpayers, as I alluded to earlier. Something like the bottom 60% of taxpayers receive more in services from the state than they pay in tax, so I do not feel that they took an unfair level of the cost of that bailout. Of course, the banks continue to pay an additional levy over and above corporation tax to try to bring about the fairness she alludes to.

The noble Baroness, Lady Finn, is keen—I was not aware of this—on a tidal power solution. We live at opposite ends of the country; I am on the east and she is on the west. If the numbers work, I—wearing my Treasury hat—would be very interested. I have a farm that runs down to the sea; I would love to create a tidal power system there, but I do not think the numbers work. To reassure our Green Members, what is happening in offshore wind is, frankly, extraordinary. There was a contract for difference auction about a month ago—they do them every two years—and the bidding price for the offshore-generated electricity was 32% lower than two years ago. It is the most incredible development. That is why I do not accept the gloom that says that we are not embracing the green economy and decarbonising. We are now creating offshore wind at a price virtually without the need for subsidy. If the noble Baroness can do that with her tidal—

Lord Maude of Horsham Portrait Lord Maude of Horsham
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At the risk of prolonging this, does my noble friend accept that one of the reasons the cost of offshore wind has fallen so much is that there was a subsidy that enabled the unit cost of installing it to fall? Something similar could happen with tidal power. This country is uniquely equipped with the natural resource to develop something capable of being exported very widely and generating a UK-based technology that could be of enormous value, as well as a renewable resource.

Lord Agnew of Oulton Portrait Lord Agnew of Oulton
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My Lords, I am a huge fan of pump-priming. If there is a credible business case, I think it is worth taking the matter back to the Treasury, so I agree with the noble Lord. I am conscious that I am running out of time.