Public Procurement and the Civil Society Strategy
Lord Haskel Excerpts(4 years, 12 months ago)
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Lord Haskel (Lab)
My Lords, few of us would argue with the objectives of the Government’s civil society strategy. We all want to strengthen and unify the institutions and organisations which make up our civil society. The noble Baroness is quite right; public procurement has an important role to play in this and I congratulate her on moving this debate.
As the noble Baroness told us, the UK public sector spends over £250 billion, about one-third of public expenditure, on the procurement of goods and services from the private sector. This large amount of money means that directing public procurement can make a real difference. Deliberately choosing providers from the local area can make a difference to local communities. This keeps money in the local economy. Managed well, it can lead to more investment in poorer parts of the country and help revitalise local economies.
By deliberately favouring smaller firms, the Government can promote competition and discourage dependency on large monopolistic providers. Public procurement can favour firms which meet certain ethical standards, as the noble Baroness said—for example, living wage employers or sourcing fair trade products. Public procurement can also favour providers with strong community links. For example, a local authority may prefer to fund a homeless shelter provided by a church which has strong local links and is grounded in the community, rather than a large national organisation. As I said, few of us would argue with these social objectives. Indeed, most of us would welcome them.
So what stands in the way? In short: the law, value for money, public sector bureaucracy and standards. By the law I mean our EU membership and free trade agreements. The EU is relatively relaxed about restrictions on public procurement. On the other hand, far less relaxed are the existing free trade agreements and the proposed free trade in services. The agreement aims to provide equal treatment to foreign service providers as well as promoting competition. Indeed, Liam Fox has repeatedly stated that this will be a priority for UK trade policy after Brexit.
These trade deals include heavy restrictions on local and ethical procurement. Put simply, the Government’s prioritisation of these agreements is at odds with their civil society strategy to use public procurement to strengthen civil society. The free trade ambitions of one government department are at odds with the domestic policy objectives of another. It may be above the Minister’s pay grade to sort this out, but somebody will have to do it.
I can be a lot more helpful to the Minister on value for money, bureaucracy and standards. For some time there has been growing concern about failures in procurement. The care homes fiasco is but one recent example; the noble Baroness mentioned Carillion. These failures have undermined the public’s trust in outsourcing. It is estimated that the recent failure of the privatisation of the probation service will cost the taxpayer some £450 million. Yet the Government aim to achieve value for money. Most believe that, with the exception of IT, this is simply a matter of price, as the noble Baroness said. This seems to have led to the evolution of large monopolies delivering public services, and it is difficult to find an alternative when they fail. Measures of market concentration in this and other sectors have risen sharply in recent years. As a result, there is broad concern about the ethics, quality, transparency and value for money in the procurement process.
It was with these concerns in mind that, many months ago, Tomorrow’s Company—here I declare an interest—approached the British Standards Institution to see whether a well-defined set of criteria could be established to define what “good” looks like and what works in the field of public procurement. To some of us, the British Standards Institution means a kitemark—a mark which tells us that a piece of steel is strong enough to do the job. But the world of standards has moved on a long way. Standards are now a tool that enables firms to set and meet best practice. For example, the British Standards Institution now has the task of laying down the standards strategy for connected and autonomous vehicles. A British standard for public procurement would level the playing field so that UK businesses of all sizes can be included in the public sector supply chain. By meeting the standard, an organisation can demonstrate that it meets the generic requirements for an organisation providing products and services to the public. All of this is this in keeping with the Government’s civil society strategy and the requirements listed by the noble Baroness.
Meeting the standard allows small and start-up organisations to prove themselves suitable and capable. This takes the burden off public sector administrators to perform due diligence, as there will be third-party conformity assessment. It reduces bureaucracy because it simplifies the complex process of tendering for government contracts—a process which deters many small firms from tendering. Indeed, standards can be a form of self or lighter-touch regulation, so that the Government are not obliged to enact legislation establishing best-practice benchmarks.
For this purpose, British Standard 95009 will come into effect on 31 May. The Minister may already know about this, because his department has been consulted. This standard was written with input from a broad range of stakeholders, including government departments, large and small firms, industry organisations—reflecting infrastructure and technology—and charities and welfare organisations; everybody was consulted. This standard also sets out good practice in the supply chain. This is the second time I have raised this issue in your Lordships’ House, and I make no apology. We seem to have lost our way on public procurement and services, and this British standard will point us back in the right direction.
My question to the Minister is: will the Government insist that all public procurement bodies and suppliers to the public sector will have to satisfy British Standard 95009? After all, the British Standards Institution is appointed by the Government as the National Standards Body. This will not only help to restore public trust and confidence in public suppliers and contractors and in the Government’s handling of the supply of these goods and services; by adopting this standard, public procurement will be much more aligned with the Government’s civil society strategy—the purpose of this debate—and it will incorporate many of the points made by the noble Baroness.
Conduct of Debate in Public Life
Lord Haskel Excerpts(5 years ago)
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Lord Haskel (Lab)
My Lords, when I was a student I used to play in curtain-raiser rugby league matches for the local team. We got a bit of money to cover our expenses, but this was docked for bad behaviour. Bad behaviour was “playing the man, not the ball”. I do not wish to trivialise this subject, but I was reminded of this when my noble friend introduced the debate—on which I congratulate him—because it is playing the man, not the ball, that introduces toxicity into public life.
You do not have to be a visitor to the United States to be appalled at the way the President has made personal insults a firm substitute for political argument—the noble Baroness, Lady Hussein-Ece, mentioned this. Of course, because it comes from the President, this practice is legitimised and copied. As the Guardian pointed out, we had a good example of this here recently, when Greta Thunberg came from Sweden. Instead of dealing with her arguments and evidence, many commentators just called her weird, privileged, inexperienced or irrelevant. It is this disparaging of a person, rather than dealing with the argument or the evidence, that is one of the causes of toxicity in our public life.
As my noble friend Lord Harris and others have explained, social media thrives on this. Social media platforms are set up to reward people’s engagement: people are encouraged to feed off each other in a continuous cycle that enables the amassing of data. This data then enables people to target microgroups with messages that nobody else sees—angry messages of an extreme nature that would otherwise never be published—all adding to toxicity. The internet is a wonderful medium for knowledge and information, but as the noble Baroness, Lady Bottomley, and other noble Lords have said, paradoxically, it has degraded debate.
What can we do about this anger and frustration? This tendency towards extremism has been apparent for some years. Like my noble friend Lord Parekh, I think it is due to rising inequality: in wealth, income and the standard of living, as well as regional inequality. My noble friend told us in his introduction of a poll that found that 82% of the public now feels that the country is more divided than ever. A cause of this inequality is the hollowing out of the economic middle. At the same time, we have a polarisation of the generations, as shown by the FCA study, and the unfairness of the generation divide, as shown by your Lordships’ own Select Committee. This hollowing out and polarisation is not the inevitable result of automation and new technology but the result of bad government and bad management—economic and social. Much of this automation is taking place without increases in productivity, resulting in unequal distribution of the benefits. If we do not do anything about it, new artificial intelligence and robotics will continue the process and widen the gap even more. This hollowing out of the economy is a direct cause of the hollowing out of our politics, somehow legitimising extreme views and language. As somebody famous said, bad economics always result in bad politics.
Yes, there are efforts in reskilling, apprenticeships and lifelong learning, and there is a minimum wage, but it is not working. The “just about managing”, who so concerned the Prime Minister when she came to office, are still there. Reports from various welfare charities, food banks and the children’s organisations that support the “just about managing” tell us that their number is increasing rapidly.
The problem that my noble friend has set us is about turning round society, and part of that turnaround is economic—economic reform that stops the hollowing out and produces a more equal distribution of wealth and of income so that all of us feel included. Public services are part of this turnaround. Hardly a day goes by without reports of the impact that austerity is having on our public services, particularly those provided by local authorities, which have had cuts to their grants of 30% to 40%. The cumulative effect of all of this—a political choice, not an economic one—has been to increase inequality. In this turnaround, citizenship and identity matter. After all, we are a community of citizens. As part of this turnaround, let us clearly define what is owed to and expected from each citizen. Add this to less inequality and we will have a more sustainable and successful democracy.
Economy: Productivity Measurement
Lord Haskel Excerpts(5 years, 1 month ago)
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Lord Haskel
To ask Her Majesty’s Government what steps they are taking to modernise the way productivity is measured in the economy.
Lord Young of Cookham (Con)
My Lords, the independent Office for National Statistics measures productivity and has increased the volume and timeliness of productivity data, which can now be accessed by region, with detailed breakdowns of region by industry. We are the only country in the world to produce quarterly, rather than annual, multifactor productivity reports, which take account of capital. We now also have the UK’s first official estimates of aggregate infrastructure and intangible assets, such as research and development.
Lord Haskel (Lab)
I thank the Minister for that reply. However, it is not the quantum of data that we need but up-to-date data. The Government’s industrial strategy—if noble Lords remember that—is directed towards raising our productivity by developing the so-called intangible economy and the digital economy. Yet the way we measure productivity is still biased towards traditional industry. It is the same with GDP. As they say, what gets measured gets done. Will the Government show some urgency and speed up, encourage, publicise and conclude the work of modernising these measurements so that we may get a better understanding of exactly what is going on in our economy today?
Lord Young of Cookham
The noble Lord has a long-standing interest in productivity data, perhaps inspired by the book Capitalism Without Capital by Professor Jonathan Haskel, with whom he has a relationship that is statistically significant. The noble Lord is quite right that intangible assets such as software, research and development and intellectual capital are now just as important as tangible assets. In fact, the annual investment in each is about the same. The ONS regularly engages with leading academics and government departments to ensure that its work meets their needs; there is an annual productivity user forum. Over the next two years, the ONS is investing in improving information, particularly on public service productivity, and I will ensure that it takes the noble Lord’s injunctions on board tomorrow morning.
Interserve: Provision of Public Services
Lord Haskel Excerpts(5 years, 5 months ago)
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Lord Haskel
To ask Her Majesty’s Government what assessment they have made of Interserve’s financial situation and the impact this may have on the provision of public services.
Lord Young of Cookham (Con)
My Lords, the funding arrangements of Interserve are the responsibility of the company and its directors. The Cabinet Office has regular discussions with the company’s management and monitors the financial health of all government strategic suppliers. The company successfully raised new debt facilities earlier this year and plans further restructuring to strengthen its balance sheet and financial robustness.
Lord Haskel (Lab)
I thank the Minister for his reply, but the monitoring does not seem to work, because this is happening too many times. As well as infrastructure, Interserve does welfare to work, probation, home care and hospital work—all important services—yet because of its financial structure, like many other public service companies, it has become a speculative vehicle for hedge funds and private equity. How will the Government rectify that? Will they give it more work to keep it afloat or sink it by taking the work away? How will they ensure that these essential services continue?
Lord Young of Cookham
As I said, the Government are in regular contact with Interserve to monitor its performance. Not only does the Cabinet Office have overall responsibility for monitoring the health of the company, but individual government departments that have contracts with Interserve have a dialogue with it about those specific contracts. The noble Lord may have seen the statement which the Cabinet Office issued a few days ago:
“The Cabinet Office has expressed full support for the work the company is doing to implement”,
its “long-term recovery plan”. It is worth making the point that Interserve is very different from Carillion. Interserve is now taking the action that Carillion ought to have taken—to restructure its balance sheet and improve its robustness—and, unlike Carillion, it does not need new money. It needs to turn debt into equity. It is not accurate to make a direct comparison between the two companies.
Cyberattacks
Lord Haskel Excerpts(5 years, 5 months ago)
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Lord Haskel
To ask Her Majesty’s Government what steps they are taking to protect the United Kingdom’s critical infrastructure from cyberattacks.
Lord Young of Cookham (Con)
My Lords, ensuring that our critical national infrastructure—CNI—is secure and resilient against cyberattack is at the heart of our 2016 national cybersecurity strategy. The National Cyber Security Centre we established has improved our understanding of the threat and provided a unified source of advice and support. We have also strengthened regulatory frameworks across much of the CNI to ensure that cyber risk is managed in the national interest.
Lord Haskel (Lab)
I hear what the Minister says, but I do not think he will satisfy the committee. It defined the Government’s current position as,
“long on aspiration and short on delivery”.
It says that the Government have failed to match the increasing threat with improved cyber resilience in both the public and private sectors and that it finds a lack of expertise to provide credible insurance. It would like to see a Minister appointed to ensure that there is capacity. Putting this right will require a lot more than money and good intentions. Will the Government take steps to carry out the report’s proposals?
Lord Young of Cookham
The noble Lord will be aware that this is a substantial report published two days ago by the Joint Committee on the National Security Strategy, with 22 senior Members of both Houses. It has 10 major recommendations and the Government will want to respond to those in due course. The noble Lord quoted a little from the report and, just to add some balance, may I also quote from it? It said:
“Many of those who submitted written evidence … welcomed the step change in Government approach in the 2016 NCSS, with some describing the strategy—and the activity it underpins—as world-leading. This appears to be borne out by the notable level of international interest in the UK’s approach to cyber security”.
That gives a somewhat more balanced response than what the noble Lord quoted. There are many recommendations. One is that there should be one Minister; the committee wants what it calls a collective mind—a somewhat Orwellian concept. If we look at the building blocks of national security, we have GCHQ, which is under the Foreign Office; the Home Office, with overall responsibility for protecting the citizen if there is a cyberattack; the Ministry of Defence, which is in charge of offensive cybersecurity; and the Cabinet Office, which is in charge of CNI. It is very difficult to have a collective mind. What is important is having a collective strategy that all the Government agree to, underpinned by substantial resources and supervised by the National Security Council, chaired by the Prime Minister. That is more important than having what the committee calls a collective mind.
Employee Shareholding and Participation in Corporate Governance
Lord Haskel Excerpts(5 years, 7 months ago)
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Lord Haskel
To ask Her Majesty’s Government what assessment they have made of proposals for greater employee shareholding and participation in corporate governance.
Lord Haskel (Lab)
My Lords, this is a topic on which there is a surprising amount of agreement. It is because of the increasing erosion of public confidence in business that all the recent party conferences discussed it. They debated how to reshape business and shake up the way it works. It was caused by worries about the energy companies ripping off their loyal customers, and drew approval at both the Labour and Conservative party conferences. Disgust at the bonus paid to the chief executive of a housebuilding firm in York, which would pay to house all the homeless there, also drew cheers at both party conferences. This puts intervention by government on to the political agenda.
So what is to be done? There seems to be a degree of unanimity. Both parties agree on the need for greater boardroom diversity, with employees being an essential part of that diversity. Employee shareholding has been Labour and Liberal Democrat policy for some time, and only the other day a past deputy chairman of the Conservative Party suggested that there should be tax incentives for those who share profits and equity with staff. It is right that there should be agreement on this. Recent research concluded that we all benefit: employees benefit through a better sense of fairness, motivation and well-being, companies from unlocking exceptional levels of discretionary effort, and society benefits too. Research also shows that companies which have 3% or more of their share capital held for the benefit of employees regularly outperform other companies. So it is not difficult to draw the conclusion that employee shareholding and involvement in corporate governance is a characteristic of the successful, well-run business.
This is not new: 40 years ago, I introduced these principles in the business I was building, and I was not the exception. Governments have introduced it—our postman got shares when Royal Mail was privatised. However, the Enterprise Act 2013, designed to encourage employee shareholding, has had hardly any firms adopting its provisions. I think that this is because a sense of ownership is not enough. There also has to be a share of power, some say in policy. All this comes together in what many refer to as stakeholder capitalism, or business with a purpose—a shared sense of purpose not only within the business, but with society, customers, suppliers and all who are affected by the business, large or small.
I am grateful to the Financial Reporting Council for sending me its updated corporate governance code, because it too recommends engagement through directors appointed from the workforce and places particular emphasis on the relationship with a wider range of stakeholders. The Companies Act already calls on companies to behave in this way. There are new regulations that will require companies to report on salary ratios, engagement with employees and better corporate governance.
Fortunately, there are some schemes designed to help this work—to help workers be responsible shareholders and directors, in trying not only to raise productivity, but to make their places of work more purposeful. One of these is Be the Business, chaired by Charlie Mayfield. I declare that I am a member of it. Be the Business provides tutoring and mentoring by experienced executives from many of our successful companies—interventions that are already giving firms a boost, particularly SMEs. Be the Business also creates business improvement networks that enable best practice to be shared between firms that would otherwise not be exposed to more efficient ways of working.
The Government’s industrial strategy—noble Lords might remember that—if it is ever put into practice would target solutions aimed at raising productivity, but employee shareholding and participation in corporate governance hardly feature. Of course, worker directors and shareholders have every incentive to raise productivity because this is the key to higher wages, but the tutoring, mentoring and sharing of best practice could have been a very helpful recommendation made to the Government by the promised industrial strategy council, which has yet to meet.
With increasing knowledge and understanding, maybe worker shareholders will ask more searching questions, such as why boards authorise share buybacks instead of investing to raise productivity. Firms might also welcome shareholders who are not algorithms with trading strategies entirely unrelated to the business and where average holding is now measured in hours and minutes, not months and years.
Tomorrow’s Company—an expert in this field—tells us that, in its experience, the value of employee ownership and involvement very much depends on the degree of their involvement and their influence on the leadership of the company. The Financial Reporting Council currently has no statutory power to sanction companies for failing to comply with its code. So a lot depends on how rigorously these codes and regulations are enforced. The French think that it should be compulsory and in France there are strict laws about profit-sharing and worker representation on boards. It is similar in Germany. It does not seem to have done their economies any harm. In fact, some think that this is one reason why their productivity is well ahead of ours.
Light-touch regulation might be more acceptable to some, but in many cases it does not work. Obviously the extra force of law helps boards to challenge the company executives, hopefully spot trouble early and insist that is dealt with. Many wish that this had happened at Carillion. Labour’s proposals for a compulsory scheme of employee shareholding is on the right lines, but I would like to see it combined with an equally strong enforcement of the new code from the Financial Reporting Council.
These are Labour ideas that go back a long way. They were included in our 2017 election manifesto. In her newspaper article last weekend the Prime Minister suggested that in some things we should join her. In this matter the shoe is on the other foot. Instead of borrowing our ideas, why not join with us and help develop them? My question to the Government is: will they join us and give employee share ownership and participation in corporate governance the force of law? Join us to help rebuild the confidence and trust in business that we all agree is so essential to our future, because, whatever the outcome of the Brexit negotiations, these structural economic problems will still need to be solved. They will not go away.
I thank all noble Lords for participating in this debate. I look forward to hearing what everybody has to say and to the Government’s response.
Elections: Personal Data
Lord Haskel Excerpts(6 years, 1 month ago)
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Lord Haskel
To ask Her Majesty’s Government what steps they are taking to prevent possible abuse of the United Kingdom’s electoral system following the evidence given by Mark Zuckerberg to the United States Senate on 10 April.
Lord Young of Cookham (Con)
My Lords, the Government take the security and integrity of our democratic processes very seriously. We have measures in place to protect elections from undue interference, both on and offline. We talk regularly with the major tech companies about a range of safety and security issues; we work closely to support those responsible for overseeing and delivering our elections; and we keep the need for legislation under review.
Lord Haskel (Lab)
My Lords, I hear what the Minister says, but are the Government listening to the obvious concern from all over that our political integrity is under threat? If the Government were listening, surely our institutions would already have caught up with the much stronger powers of enforcement and regulation such as those of the Financial Conduct Authority, the regulations in place regarding the press, TV and radio or the powers to break up market dominance that we have in other sectors? Will the Government start catching up now?
Lord Young of Cookham
The noble Lord will know that the Data Protection Bill is at the moment in another place, having passed through your Lordships’ House. That Bill gives extra powers to the Information Commissioner to safeguard the integrity of our democratic process, as he indicated. For example, once the legislation is on the statute book, the maximum fine for an organisation such as Facebook would rise to £1 billion. New criminal offences are being created and the Information Commissioner is being given extra powers. As I said a moment ago, there is a dialogue with the Information Commissioner and if at any point she feels that she needs additional powers, over and above those in the current legislation, we are more than ready to consider them.