Local Authorities (Procurement)

Lord Stunell Excerpts

Tuesday 24th April 2012 Westminster Hall

[The Parliamentary Under-Secretary of State for Communities and Local Government (Andrew Stunell)]

It is a pleasure to serve under your chairmanship today, Ms Clark. My congratulations to my hon. Friends the Members for Carlisle (John Stevenson) and for Stevenage (Stephen McPartland) for their contributions. I particularly congratulate my hon. Friend the Member for Carlisle on securing the debate.

I am sure that hon. Members will be pleased, but not surprised, to hear that the Government are as keen as my hon. Friends to ensure that local government spends its money as effectively as possible. It is interesting that several different figures for that have been mentioned: my brief says that the figure is £62 billion a year. Whatever the amount is, it is certainly an awful lot of money and, clearly, there is significant scope for it to be spent better. That can help to save taxpayers’ money, reduce the overall deficit we face and, in many cases, lead to local authorities commissioning better and more appropriate front-line services.

I agree with my hon. Friends that local government has a good record. Indeed, if one were to speak to local government representatives, they would be quick to point to various studies that suggest that their value for money is, on the whole, better than central Government’s value for money. I do not want to convey the wrong impression in my contribution by suggesting anything different.

I want to use the available time to set out what the Government are doing to help the sector build on its procurement practices and to refer hon. Members to the parliamentary answer that the Under-Secretary of State for Communities and Local Government, my hon. Friend the Member for Bromley and Chislehurst (Robert Neill), made, in which he set out a table showing the procurement expenditure in the last financial year for each local authority in England. He also set out the steps that the Government and the Department are taking. However, we are very much talking about a project led by the Local Government Association in England to develop a package of work to take forward the agenda.

Overall, as my hon. Friends have pointed out, the Government are aiming to put councils and communities back in control of their own destinies through the devolution of power and control over budgets to councils. Local authorities are therefore increasingly responsible for taking their own procurement decisions, subject to the requirements of best value legislation and the EU and UK regulatory framework.

There is no doubt that difficulties are faced by local contractors seeking to win contracts. In particular, smaller contractors may find that they are squeezed out, as has been mentioned. In fact, the EU procurement rules are not nearly as severe or draconian as is often suggested. Nevertheless, they are a constraint.

Value-for-money pressures can be balanced legitimately and legally by social value and environmental value. It is entirely right, legitimate and proper for those seeking tenders to set out such requirements in the tender process. Local authorities can therefore use the procurement rules to promote local enterprise, and the Local Government Association’s guidance “Buying into communities” is designed to help local authorities do that within the EU procurement rules. It helps councillors and officers in authorities to see how other authorities have utilised the rules to get the outcomes they want from their public spending. I therefore commend it to hon. Members, and I invite them to make sure that their local authorities are fully aware of the advice and support it offers.

Good procurement practice by authorities can help to promote opportunities for local small and medium-sized enterprises, helping them to bid for all or a part of a contract and to develop local skills. We heard from my hon. Friend the Member for Stevenage about the work Hertfordshire is doing, and we heard about Cumbria from my hon. Friend the Member for Carlisle.

Essex county council has recently done work highlighting how its golden triangle of procurement has utilised savings of £120 million per year and created about 200 apprenticeships. The Federation of Small Businesses has acknowledged that that has improved access to council contracts. It is clear that SMEs are a key ingredient in strong local economic growth, and public procurement is just one way in which an authority can help those in their area to grow. That said, it is a surprise and a disappointment that local firms still regularly mention obstacles such as pre-qualification questionnaires and duplicate tenders, as well as the difficulty of discussing forward work with local authorities and, therefore, of planning a sensible work stream and a sensible bidding strategy.

Recently, therefore, the Cabinet Office has announced a series of actions it will take to help SMEs get a greater percentage of contracts. One pledge involves reducing or removing the necessity for pre-qualification questionnaires, particularly where they are for work below £100,000. There is no sensible reason why an SME bidder would have to fill out multiple questionnaires several times over to compete for procurements, and such things do not give the impression that councils welcome SMEs’ business and trade. Aside from pointing out that such PQQs are unnecessary below £100,000, the Cabinet Office has produced its own model, four-page PQQ, which can be used instead of the often far too elaborate examples used by tenderers.

My hon. Friend the Member for Stevenage drew attention to the electronic tendering that takes place in Hertfordshire. He also mentioned the biz4Biz scheme. That is another area where local authorities can play a helpful part in supporting local small businesses. My local authority, Stockport, organises business-to-business fairs in the town hall, where large local enterprises are put in touch with small ones, and trade links are established. That is not about spending public money; it is about the council accepting that it has a role and some responsibility for ensuring that large companies in the area—or small companies for that matter—look first to the local providers of services before they look further afield.

The Local Government Association is working with the Federation of Small Businesses and with individual authorities to highlight exactly how procurement can be simplified and access broadened. There is, therefore, a lot of good practice and quite a lot of good understanding. Sometimes, procurement officers and councillors say that they cannot do such things because of EU rules or this or that piece of legislation, but quite a lot of what is said in those circumstances is purely and simply mythology.

That brings me to the questions that my hon. Friend the Member for Carlisle raised about whether the new provision in the Localism Act to give every local authority a general power of competence allows them to deliver a better performance on procurement. The answer to that is a straightforward yes. The general power of competence allows any local authority to do anything that an individual can do, which gives them a great deal of flexibility. Of course, they must obey the law and have regard to reasonableness. As my hon. Friend rightly pointed out, we could not have a wild west contracting situation. It is absolutely right and proper that due process should be followed, but within that councils have a great deal of discretion about how they proceed.

My hon. Friend asked whether local authorities were sufficiently aware of the legislation of my hon. Friend the Member for Warwick and Leamington (Chris White). Perhaps the fact that he has had to bring the matter to this Chamber today suggests that they are not. I am sure that he and I will want to contribute to a process of increasing awareness. Moreover, let me draw his attention to the work of my right hon. Friend the Secretary of State for Communities and Local Government in notifying councils about some of the opportunities that exist in their partnerships with the voluntary and community sector. Again, that underlines the point that they should be taking into account not just short-term, straightforward cost savings but the wider social and environmental impact of their decisions.

Beyond Cumbria, the north-west procurement portal is a good example of how the region is helping businesses to identify contracts more easily. At a quick look, there are numerous opportunities there, broken down by council areas and sub-regions, and the portal links to other portals around the country. Of course that is producing results in many places.

Through the efforts that have been made with the north-west portal, it has been possible for the 10 authorities in the Association of Greater Manchester Authorities, including mine, Stockport, to establish that they spend jointly £2.5 billion a year, that £300 million of that spend is different authorities spending with common suppliers, and that they are redirecting what they do such that 56% of their spend is now with providers based within the 10 local authorities and 69% of what they spend is spent with companies within the north-west. I am sure that there is further to go for many local authorities, but that gives an indication of what can be achieved when local authorities put their heads together and work at it hard.

My hon. Friend’s third question was whether I would be forcing local authorities to do things—