Procurement Bill [ Lords ] (Second sitting)

Kirsty Blackman Excerpts

Committee stage
Tuesday 31st January 2023 Public Bill Committees

[Florence Eshalomi]

I thank my hon. Friend for that example of why social value is so important. That contract was a missed opportunity to employ local people. We all want those local benefits, and employment in our constituency, so it is important that contracts be awarded to local companies, as well as the big ones.

Amendment 10 would require public value to be among the procurement objectives. That would complement our amendment on social value; together, the amendments would add real teeth to the Bill, and would give contracting authorities the mandate to make decisions that would benefit not only their area but the whole country. That is important because we spend £3 billion a year on procurement, and although the Bill is a step forward, without clear mandates on social value and public value, contracting authorities may miss out on the chance of creating tremendous value for the public through their procurement processes. Amendment 89 clarifies that by explicitly providing a wider definition of value for money. The Bill does not define value for money, nor does it set out what can or should be considered when an assessment is being made of which is the most advantageous tender.

Legislation allows for wider considerations of value, but the determining factor too often remains the low unit cost. That is problematic because it can lead to services being procured that do not effectively meet needs, and it can drive higher costs in the long term, particularly when it leads to a spiral of support needs. People do not get the support that they need, and their need for support escalates as a result. They are forced to keep going to services that cannot give them the help that they need, or cannot address the root causes of their issues.

Although the Cabinet Office is planning training to be rolled out alongside the legislation to encourage culture change, it is important that the legislation goes as far as possible in encouraging better practice. Further defining value for money is an example of how it could be done.

The aim of amendment 89 is to help to prevent the false economies that arise when we take value for money on a short-term and shallow basis. When we are considering such massive parts of public spending, crossing many levels, it is vital that every penny spent ties together. We do not want a situation where saving a penny in one pot loses a pound from another. By defining value for money in the way that the amendment does, we could ensure that contracting authorities consider the wider impact of their decisions. Again, that could lead to significant efficiency savings for this and future Governments, and to stronger public services for all to enjoy.

New clause 2 would place the procurement principles on the face of the Bill: promoting the public good; value for money; transparency; integrity; fair treatment of suppliers; and non-discrimination. In their December 2020 Green Paper, “Transforming public procurement”, the Government proposed enshrining those principles in law. In responding to the consultation, the Government stated that 92% of 477 respondents agreed with the original desire to put the procurement principles in the Bill, so I was not the only one surprised when the principles were missing from the Bill when it was published in the other place.

Our new clause 2 seeks to accomplish the original aim of the Bill. I know that we will hear from the Minister that we should trust the Government on such issues, and that we should wait for the national procurement policy statement, rather than looking to put things in the Bill. The principles are so important to how we carry out procurement, however, and perhaps the best source for why that is so comes from the Government. In the Green Paper, the Government say of the public good:

“The decision to invest public funds into policies, services, projects and programmes is subject to analysis and appraisal to assess the public good that is expected to accrue as a result of the expenditure. For national spending this will have been conducted in accordance with the HM Treasury Green Book guidance and subject to National Audit Office scrutiny. Procurement should draw a clear link between the objectives, outcomes and anticipated benefits that underpin the investment decision and the selection of contracting parties to deliver those benefits…Public procurement should also be leveraged to support strategic national priorities. Commercial teams should have regard to the Government’s national priorities when conducting public procurement. These will be set out in the National Procurement Policy Statement…This is consistent with international practice where public procurement is regularly leveraged to achieve social and environmental value beyond the primary benefit of the specific goods, services and capital works through operational delivery that contributes additional social value.”

The Green Paper goes on to say of value for money:

“The Government is making clearer the ways in which value for money is assessed at the point of the investment decision, which will be set out in a revised Green Book. A critical element of the assessment is a strong strategic case that sets: a clear objective aligned to government priorities, a rationale for intervention, and/or robust evidence and analysis for how different options for delivering that intervention will advance that objective…The role of procurement is to translate the desired outcomes into the right contracts and select the supplier or suppliers that will deliver these in the way that offers best social value for money. For many procurements there may only be a single contract, but for complex major projects there will be many hundreds of separate contracts of different types, sizes and sectors that need to be packaged and procured in such a way as to deliver the whole project successfully. Whether there is one contract or many it is critical to maintain the ‘golden thread’ from government priorities via the business cases through to procurement specifications and the assessment of price and quality when awarding contracts.

Value for money does not therefore mean simply selecting the lowest price, it means securing the best mix of whole-life quality and effectiveness for the least outlay over the period of use of the goods, works or services bought. Value for money also involves an appropriate allocation of risk and an assessment of the procurement to provide confidence about its probity, suitability, and economic, social and environmental value over its life cycle.” On transparency, the Green Paper states:

“The principle of transparency in public procurement is central to the integrity and accountability of the system and the fight against corruption. This is consistent with best international practice. It ensures business opportunities are accessible and processes and decisions can be monitored and scrutinised. It ensures that decision makers are held accountable for spending public money and helps open up public procurement to more effective competition that in return can deliver better value for money.”

On integrity, it states:

“The principle of integrity is key to strengthening trust and combating corruption. Procurement professionals must always bear in mind the needs of the ‘customer’ or ‘user’. Planning a public procurement must promote good governance, sound management of public money, and a professional relationship between buyer and supplier, e.g. managing conflicts of interest, protecting intellectual property and copyrights, confidential information or other standards of professional behaviour.”

On the fair treatment of suppliers, it states:

“The principle of fair treatment of suppliers means all suppliers must receive fair and reasonable treatment before, during and after the contract award procedure so as to encourage participation by suppliers of all types and sizes. Suppliers should have timely access to review mechanisms to ensure the overall fairness of the procurement process.”

And on non-discrimination, the Green Paper states:

“The principle of non-discrimination applies to procurement under the new regulations and means contracting authorities cannot show favouritism among domestic suppliers. This principle also applies to suppliers who have rights under an international trade agreement that covers the procurement. Non-discrimination in this context means that suppliers, goods and services from any other party to the agreement are given no less favourable treatment than domestic suppliers, goods and services.”

Thank you, Mr Efford, for indulging me; I felt it was really important to outline the very same principles that the Government put in the Bill, but on which they have now reneged. I do not think anyone in this room would disagree with those principles, but the treatment of the procurement principles during the lifetime of the Bill shows why we are keen to make sure we get this down in legislation. We cannot rely on just words and expect to trust the Government when they have already changed their mind on the Bill so much.

Delegating so much responsibility to regulations and statements risks taking the Bill further away from its original intentions, and I do not think that even the Minister wants that. I hope he has listened to those key statements, as outlined by his Government. I urge him to live up to the pledges in the Green Paper, which were supported in the other place, and to support our amendment.

[Kirsty Blackman (Aberdeen North) (SNP)]

Thank you for chairing our sitting this afternoon, Mr Efford; we appreciate it. I am going to talk about my amendment 101 and also the Labour party’s amendments 9, 10, 89 and new clause 2.

I am happy to support all the Labour party’s amendments. It is particularly important to put new clause 2 in the Bill. I cannot find a definition of value for money or of public benefit in the Bill. If the Government are making suggestions about how contracting authorities should proceed, they should be clearer about what that means and what outcomes they are seeking in the Bill, rather than in a national procurement statement to come at a later time. I understand that the Government’s priorities will change, which is to be expected, particularly when we expect a change of Government. That will happen and they will definitely have different priorities, but the principles that we are talking about in new clause 2 will surely not change. They are the threads that should run through everything we do and all the decisions we make.

I want to mention integrity specifically. The Prime Minister has said that he wants his Government to be marked by professionalism, accountability and integrity; it is very clear that integrity is one of the Government’s priorities in this regard, so not having it on the face of the Bill when the Government have been very clear that they support it seems odd to me. Adding it to the Bill through new clause 2 would be incredibly useful.

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[Alex Burghart]

As the hon. Lady knows, transparency sits throughout the Bill. As I have just said, there are far greater requirements to publish than ever before, on an online platform that the Government will provide. She gave the important example of Ukraine. She will remember that we talked about this on Second Reading: the Ukrainians were advisers to the UK Government when we were putting our ideas together, so we are very much building on what they did in Ukraine. This will be an extraordinary step forward for transparency in the nations that are taking it up.

The Bill also requires contracting authorities to have regard to acting, and being seen to act, with integrity. That will oblige them to consider how to prevent fraud and corruption through good management, prevention of misconduct, and control. Failure to take anti-corruption steps or measures will be an indication that the contracting authority did not have a regard to the importance of acting and being seen to act with integrity.

Contracting authorities will also be required to comply with the provisions in the Bill on conflicts of interests and the exclusion of suppliers, preventing contracts from being awarded to inappropriate suppliers. That provides further opportunities to directly address transparency and anti-corruption issues within the context of a procurement. I hope that we all agree that it is essential that the procurement regime commands the trust of suppliers, the public and our international trading partners. In our view, the Bill already provides for those matters as it stands.

Amendment 89 seeks to define value for money. Clause 12 specifically does not define value for money to leave a degree of flexibility for different types of contracting authorities to adapt the concept for their own procurements. Contracting authorities should be able to select the most advantageous tender that prioritises things that deliver value for money for them. There are many precedents on the statute book where the term is left undefined, and that allows for a degree of flexibility. I could point to the Communications Act 2003, the Energy Act 2004, the Defence Reform Act 2014, the Bus Services Act 2017, and so on.

[Kirsty Blackman]

The Minister has answered the question in relation to value for money not being defined in this Bill because it is mentioned in other measures without that kind of definition. Regarding the term “public benefit”, is it also the case that it is widely used in other legislation without being defined? If the Minister does not have an answer now, I would be happy to hear something afterwards.

[Alex Burghart]

No, I am happy to say that it is already set out in the social value Act, I think, which I mentioned at the start of my remarks. Similarly to amendment 9, we feel that amendment 89 is unnecessary, as “public benefit” already allows for those factors to be considered, where appropriate and relevant to the contract being awarded.

New clause 2, also tabled by the hon. Member for Vauxhall, seeks to oblige contracting authorities to follow the six principles that the Government consulted on in the Green Paper. Now, the Green Paper was just that; it was a Green Paper and it formed the basis of what came subsequently. The six principles in the Green Paper were subsequently refined and then translated into the objectives and specific obligations that now exist in the Bill in the light of the responses to the Green Paper.

The language of a Green Paper is not the language of legislation, and one of the main lessons from the Green Paper and the consultation was the need to reflect the principles in a way that helps contracting authorities understand how they will implement them. That is what we have done. However, I assure the Committee that each of those principles remains within the Bill in an appropriate form. “Value for money” remains a fundamental tenet of the procurement regime. It is well understood by contracting authorities so does not need to be elaborated on.

“Public good” was focused on the delivery of strategic national priorities, so we revised it to the objective of “public benefit” to address the concerns raised in the public response to the Green Paper that it was solely about national, and not local, priorities. The revised principle supports wider consideration of social value benefits.

As we have discussed, “transparency” remains as an objective to encourage information sharing with suppliers, and “integrity” also remains an objective. The public response to the Green Paper indicated that “fair treatment” was too subjective for contracting authorities to determine by objective standards, so we introduced the concept of “treating suppliers the same”, which hon. Members will find in clause 12(2). Finally, “non-discrimination” has been converted from an objective to a hard-edged obligation in clauses 88 to 90.

The combination of the objectives and specific legal obligations in the Bill deals with procurement principles more effectively than the broad principles that the Government consulted on in the Green Paper. I therefore respectfully request that the amendments be withdrawn.

[Florence Eshalomi]

I heard the Minister’s response, and I think, again, that it is disappointing that there is a total shift between what was introduced by the Government in the Green Paper and what we now see in front of us. That was also noted in the other place.

I welcome the aim of the amendments tabled by the hon. Member for Aberdeen North. That is something that we do support, and I know that she highlighted it in a Westminster Hall debate just last week. Climate change is something that we are very much concerned about.

On ensuring that we think about the next generation, we can only do that if we protect the environment and the Earth that we are on now. We only have one opportunity. We cannot do it later, because there will be nothing left. That is a key issue that our young people are concerned about, and it must be front and centre in this Bill.

The climate elements of the Bill are really important. They touch on social value and on public value. There is an interwoven link showing why that is important, and that should receive due consideration, so it is a shame to hear the Minister not wanting to take those measures forward.

[Kirsty Blackman]

If possible—I did not indicate this before—I would like to push amendment 100 to a vote.

[The Chair]

We will come to that.

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[Kirsty Blackman]

I am quite happy to support these amendments, which are clever and necessary. They would both improve the process and make clear the direction of travel and intention behind the Bill. Procurement legislation and processes, and the tender processes that organisations have to go through in order to win a contract, are sometimes quite exclusionary. They are difficult. As the hon. Member for Vauxhall mentioned, they are easy to navigate for companies with significant teams of lawyers and tender-writing experts, but much more difficult to navigate for small organisations, which may be doing a huge amount of good but unable to translate that into writing the best possible tender. That is not to say that some of them do not write excellent tenders—I am sure some of them do—but it is important that we take that into account and include a presumption to consider such organisations.

Charities are struggling at the moment. Every charitable organisation that I have spoken to has mentioned its concerns about how it will carry on. We know that during the cost of living crisis, people are reducing their discretionary spending; they do not have any money left to spend on things such as charitable giving, and therefore charities are really in need of contracts to be able to continue to provide their services. Charities have workers—people work for charities. Without securing sensible, value-for-money contracts, charities will not be able to give their staff the uplift they need in order to avoid the cost of living crisis. It would be helpful specifically to include charities in the Bill and define that.

On co-operative societies, I have thought a fair bit about how we encourage those businesses and organisations that are not currently co-operatives but may benefit from becoming a co-operative. How do we make that landscape easier? How do we make it easier to understand how to become a co-operative organisation? I represent Aberdeen, where we have a significant number of companies that grow to a certain size and then get sold off. Some of those companies continue to flourish under some multinational, international umbrella, but some of them are just subsumed and disappeared, because the multinational is doing its best to buy up the intellectual property so that there are fewer competitors. In some of those situations—I am not saying it is the case in all situations—a co-operative would be the best way forward for the company. I do not think enough is being done to smooth the path for that and to put it on a more level playing field.

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[Florence Eshalomi]

I beg to move amendment 22, in clause 13, page 10, line 2, leave out “may” and insert “must”.

This amendment would require a Minister to publish a National Procurement Policy Statement.

The amendment seeks to mandate that the Government “must” publish a national procurement policy statement, instead of just “may”. I am sure the Minister will tell me that the amendment is unnecessary as, of course, the Government will seek to publish a national procurement policy statement. However, as has been stated, the change that we have seen in the Bill from the Green Paper to today means that we can take nothing for granted when it comes to the Government’s word on procurement.

The amendment is identical to the one tabled in the other place by Lord Lansley. When Baroness Noakes introduced it, she said that the clause’s current wording leaves the door open for a statement not to be published. Given the importance of the policy statement in setting rules for covered procurement, it would be deeply damaging for it not to be published. I urge the Minister to ensure that that cannot happen by supporting our amendment.

[Kirsty Blackman]

It seems to me that this is probably the easiest amendment for the Government to accept. They have made it clear how important the national procurement policy statement will be, and how a significant proportion of the decision-making processes in the Bill will flow from that statement.

I support the amendment, and I would suggest going even further in saying that every Government should publish a national procurement policy statement. We have had quite a lot of Governments recently, but after every general election and every first King’s Speech of a new parliamentary Session, the Government should be clear in a number of areas. They should set out their policy direction of travel, not just in procurement but in general. That is a key moment when the Government could refresh their national procurement policy statement.

I do not have a significant issue with the Government updating the statement based on priorities. We have seen what has happened in the last few years with covid, and in the past decade or so, we have developed a better public understanding of the impacts of climate change. Science has changed, and not only have priorities changed, but the social system has changed as a result of covid. It therefore seems that updating the statement would be a sensible thing to do. If the Minister is not willing to accept the amendment, I urge him to make it clear that the Government intend to publish the national procurement policy statement, no matter whether the clause says “may” or not.

We will come to the clause stand part debate, but the clause states that there is an intention to keep the statement “under review”. Does the Minister expect that if Government priorities were to change significantly, a new or a tweaked statement would be published? For example, if something major happened, as with covid or the war in Ukraine, priorities may change as a result. Does he expect Government Ministers to at least consider updating the national procurement policy statement in the light of drastic changes that may or may not come to us in future?

[Alex Burghart]

Amendment 22 would require the Government to publish a national procurement policy statement rather than just allowing them to do so. We have had a lot of debate about the nature of procurement policy and the associated important elements of procurement, such as driving social change.

As has been demonstrated by the sheer number of topics that we have touched on, procurement is often used to transact wider policies. That is correct, but we have to be realistic about the fact that those policies shift over time. The hon. Member for Aberdeen North gave a couple of examples of that. Indeed, the Government demonstrated how quickly we can change our procurement policies in the light of Russia’s illegal invasion of Ukraine. It is therefore both preferable and necessary that procurement policy is aligned with wider Government objectives. As such, the publication of an NPPS is a decision based on the strategic policy priorities relevant to the Government at that time. It needs to be as flexible as possible, and mandating a Minister to publish one takes away some of that possibility.

However, I assure the hon. Lady that the Government absolutely intend to publish an NPPS. They are working on it at the moment, and I look forward to bringing it to the House and discussing it when the time comes. She is right that it will be possible for Administrations to update their national procurement policy statement, but it will also be possible for them to withdraw it. One reason for not mandating is that there may be times when the Government are working on a new one, and there is a hiatus between the two. I therefore do not see that changing the drafting of the clause and mandating the statement is necessary. I respectfully request that the hon. Member for Vauxhall withdraw her amendment.

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Amendment 105 in the name of the hon. Member for Aberdeen North seeks to add provisions to ensure that no supplier involved in modern day slavery, crimes against humanity or genocide is granted contracts. That is a valid concern and similar to those addressed in amendment 111. We are definitely minded to support her amendment. I look to her to introduce her amendment and to the Minister to hear his response.

[Kirsty Blackman]

I will cover the amendments in the order that seems more sensible to me, which is probably not the order in which they appear on the selection list and amendment paper—apologies. I will do my best not to go over the same ground that has been covered by the shadow Minister in her excellent extensive speech. We are discussing a significant hefty chunk of the Bill and a number of different issues in one section.

The terms of Government amendment 28 are almost the opposite of new clause 2, which we discussed earlier. As I said then, I think it is one of the most important Labour amendments. I still believe that to be the case, and I think the withdrawal of the 33 principles would make the Bill poorer. This is one of those moments when you read a Bill—I am not sure how many people read Bills—and you think, “Hey, this is pretty good.” And then the Government take out the clauses that you actually liked. That is not helpful. The Government did exactly the same thing in the Online Safety Bill Committee. Before sending that Bill to the Lords, they took out some of the most useful and helpful clauses, which would have made most difference to people’s lives. I will therefore resist the Government amendment to this Bill vigorously.

Amendments 7 and 11 were tabled by the shadow Minister. I will not add too much on those, other than to say that cyber-security is one of the biggest risks facing us as Members of Parliament, the United Kingdom, the devolved Administrations—all of us. At this moment, that risk is only increasing. To have a conversation about cyber-security and national security in Committee is important, but they must also be considered during any procurement decisions. We want to improve cyber-security and national security and to take them into account, rather than forgetting them or hoping that they do not exist.

Amendment 107 on the fair treatment of workers struck me as one of the places where Government spending—public spending—could have the best benefit. Spending public money delivers not only great services for citizens, but high-quality jobs. It delivers jobs that are well paid and that have, in a lot of places, comparatively great terms and conditions. It is incumbent on us to ensure that the principles of fair work are held throughout all the decisions made on public spending. It is incredibly important that, when we use public money to create jobs, those jobs are good, well-paid jobs and, where possible, they financially recognise the increased cost of living—that the Government make the uplifts they should be making in the negotiations with various trade unions, which are struggling at the moment on behalf of workers and their members.

I will also strongly resist Government amendment 29. The shadow Minister explained it well. This is a pretty low bar. Clause 13(4) states:

“The strategic priorities to be included in the statement must include, but are not limited to…achieving targets set under the Climate Change Act 2008 and the Environment Act 2021”.

The Government passed those Acts. Why do they not intend them to be a strategic priority? Were they just things they passed in order to tick a box? If tackling climate change is a priority, clearly it should be part of the national procurement priorities.

Last week or the week before, in a Westminster Hall debate on public procurement, we heard the percentage of public money spent on public contracts; it is something like £1 in every £3. That is so much money! The clause as drafted is asking the Government to include a piece of their own legislation in the Bill as one of the strategic priorities. I do not think that that is asking too much.

I have just covered subsection (4)(a) and, in earlier discussion, we covered paragraph (b) at some length—again, I agreed with that. Paragraph (d) covers:

“minimising the incidence of fraud, waste or abuse of public money.”

That is very important. We saw the issues caused by the covid PPE contracts and the resultant massive waste of public money. It is totally inconceivable for the Government to open themselves to getting into that mess again, or for us to end up with another illegal fast-track lane, no matter how urgent the circumstances. The circumstances meant there was an urgent need for suitable PPE, not an urgent need for the Government to procure a whole lot of unusable PPE, or to prioritise recommendations from those in the VIP lane above companies that had a track record of producing PPE. It has not worked. It has failed our doctors, nurses and those working on the frontline. It has failed all of us who contribute towards public money and want it spent in a good way. It is therefore important to minimise instances of fraud, waste or abuse of public money. That should not need to be stated, but it does.