The Parliamentary Secretary, Cabinet Office (Alex Burghart) I beg
to move, That the draft Procurement Regulations 2024, which were
laid before this House on 25 March, be approved. This statutory
instrument represents a significant legislative step in
implementing the Procurement Act 2023, which seizes the
opportunity, following Brexit, to develop and implement a new
public procurement regime for over £300 billion-worth of public
contracts. The new regime helps to...Request free trial
The Parliamentary Secretary, Cabinet Office ()
I beg to move,
That the draft Procurement Regulations 2024, which were laid
before this House on 25 March, be approved.
This statutory instrument represents a significant legislative
step in implementing the Procurement Act 2023, which seizes the
opportunity, following Brexit, to develop and implement a new
public procurement regime for over £300 billion-worth of public
contracts. The new regime helps to deliver the Prime Minister's
promise to grow the economy by creating a simpler and more
transparent system that will deliver better value for money,
reducing costs for businesses and the public sector.
The regulations bring to life and set out the practical detail
necessary for the functioning of many of the Act's provisions.
They address many of the points of practical detail that are more
appropriately set out in regulations given their detailed nature
and propensity to change and need updating from time to time.
Many of the measures set out the detail required to be provided
in notices required by the Act, which allow contracting
authorities to conduct their public procurement in an open,
transparent and informative manner. They include the particular
contents of various notices that will be used to communicate
opportunities and details about forthcoming, in-train and
completed procurements.
Sir (Wokingham) (Con)
Does the Minister think the regulations are duly simplified so
that it is feasible for the self-employed and very small
businesses to have access to contracts? Is there any provision
for breaking down contract sizes so that the self-employed and
small businesses have more opportunity?
My right hon. Friend asks a pertinent question—one that was at
the forefront of Ministers' minds when the legislation was
drafted and as it made its way through both Houses. A number of
provisions in primary legislation are there specifically to
increase the chances that small and medium-sized enterprises,
which are more likely to be British, get a bigger share of the
£300 billion-worth of public procurement. Those provisions
include everything from the online procurement system that we are
building—which will increase transparency and allow greater
notification of pipelines, helping small and medium-sized
enterprises to prepare for those procurements—to reduced red
tape, which will take the burden off those SMEs and reduce their
barriers to entry. We are hopeful that a lot of local businesses
in his constituency and in mine will benefit from this landmark
piece of post-Brexit legislation.
The contents I was describing would typically include the contact
details for the contracting authority, the contract's subject
matter, key timings for the procurement process, and various
other basic information about a particular procurement that
interested suppliers would need to know. The provisions also
cover the practical measures that authorities must follow when
publishing those notices, such as publishing on a central digital
platform and handling situations in the event that the platform
is unavailable.
Beyond transparency, the instrument includes various other
necessary provisions to supplement the Act that will be relevant
in certain situations. We provide various lists in the schedules
so that procurers are able to identify whether certain
obligations apply in a particular case, including a list of
light-touch services that qualify for simplified rules, and a
list of central Government authorities and works that are subject
to different thresholds. The regulations disapply the Procurement
Act in relation to healthcare services procurements within the
scope of the NHS provider selection regime, which has set out the
regulatory framework for healthcare services procurement since
its introduction in January this year.
The regulations also set out how devolved Scottish contracting
authorities are to be regulated by the Act if they choose to use
a commercial tool established under the Act or procure jointly
with a buyer regulated by the Act. The provisions of the
regulations apply to reserved procurement in England, Wales,
Northern Ireland and Scotland, and to transferred procurement in
Northern Ireland. The Welsh Government have laid similar
secondary legislation that will apply in respect of devolved
procurement in Wales, and if the devolved body carrying out that
procurement mainly operates in Wales, elsewhere.
The Government have consulted carefully with stakeholders
throughout all stages of the reform process, and we published our
response to the formal public consultation on these regulations
on 22 March. That consultation was a great success, evoking a
good response from the various representative sectors, and
confirmed that the proposed regulations generally worked as
intended. Many stakeholders urged that certain matters be
clarified and explained in guidance and training, which is a key
part of our implementation programme that is being rolled out
across the UK. The Government response demonstrates that we have
listened to feedback, and confirms a number of areas in which the
consultation led to technical and drafting improvements.
Once the instrument has been made, contracting authorities and
suppliers will need time in order to fully adapt their systems
and processes before go-live. As such, the Government have
provided six months' advance notice of go-live of the new regime
before these regulations come into force, which will happen on 28
October this year.
(Warley) (Lab)
Will the Minister give way?
I would be delighted to give way to the right hon. Gentleman.
I thank the Minister for giving way—at least it will enable him
to draw breath—but could I ask a straightforward question? To
what extent is this instrument going to enable British industry
and British services to compete on a level playing field, in
which we prioritise our domestic producers like every other
country in the world does?
The right hon. Gentleman knows what is coming, because he asked
me this question a number of times during the passage of the Act.
We are doing two main things: the first is that we are greatly
simplifying our procurement processes, which—as he heard me say a
moment ago to my right hon. Friend the Member for Wokingham (Sir
)—will particularly work to the
advantage of small and medium-sized enterprises. However, the
right hon. Gentleman must be cognisant of the fact that we have a
number of international trade agreements with countries all over
the world, in which we have agreed to compete with them on a
level playing field. The only way in which we could deliberately
give advantageous opportunities to British companies vis-à-vis
those arrangements would be to break those trade deals. I am sure
that is not what the right hon. Gentleman is proposing.
rose—
I will give the right hon. Gentleman one more go.
We have a lot of time and a thin House. I presume that the United
States is also a signatory to the same trade treaties, yet it has
the “buy American” legislation, which is very strong and very
effectively enforced. In the area of shipping, for example, it
also has the Jones Act, which says that anything being shipped
between ports in the United States has to be carried by American
vessels. The United States is working under the same treaty, so
why is it able to do that, while we, for some reason—perhaps deep
Treasury dogma, or long-standing civil service prejudice against
industry—cannot?
If the right hon. Gentleman looks at the details of the trade
deals that we have with other countries, he will see that by and
large, those trade deals have been created in order to further
commerce and trade between two countries, and agree that there
will be areas in which there will be a level playing field
between our country and that other country—that is often the
basis of a trade deal. The United States is the world's leading
economy and has been for over a century, and can sometimes strike
deals or come to arrangements that other countries that are not
the world's largest economy cannot. I am afraid he will have to
go and do his own research on American trade deals, but I can
explain to him why we have the procurement system we do and why,
because of the steps we have taken in this legislation, we will
be creating additional opportunities for small and medium-sized
enterprises in his constituency as well as in mine. That is much
for the better, and it is a much better situation than we found
ourselves in while we were still in the EU, with a very
cumbersome, slow-moving and long-unreformed system of procurement
to which we had been shackled for about 40 years.
For the avoidance of doubt, Members will want to be aware that
this statutory instrument has been corrected to remove drafting
references and a couple of typographical errors that were
mistakenly added during the publishing process. I hope that
colleagues will join me in supporting these regulations and will
approve this SI today.
Mr Speaker
I call the shadow Minister.
4.10pm
Dame (Llanelli) (Lab)
Labour Members will not be opposing the regulations, which
provide the detail needed for the Procurement Act to come into
effect later this year. As Members across the House will recall,
there was a need for a new procurement Act to reform the EU
law-based procurement regime following the UK's exit from the EU
and to consolidate various procurement regulations into one
place. For those reasons, we did not oppose the Procurement Bill
on Second or Third Reading.
The purpose of the Procurement Act was to create a simpler, more
flexible commercial system that better meets our country's needs
after having left the EU, while remaining compliant with our
international obligations. However, as we have made clear in this
House before, we are concerned that the Procurement Act was a
wasted opportunity to reform procurement. In spite of our
attempts to strengthen and improve the Bill with our amendments,
the Procurement Act, when it comes into force in October, will
unfortunately allow the same wasteful approach to emergency
contracting rules that we saw during the pandemic, when friends
of and donors to the Conservative party were given the first bite
of the cherry while decent, skilled local businesses were denied
the same opportunity. Billions of pounds of public money was
wasted while excellent small and medium-sized businesses were
overlooked. Nothing in the draft regulations will address that
concern.
We also made it clear that we were very disappointed that the Act
failed to mandate social value to secure investment in good
British businesses, and I have to say that I was disappointed by
the answer the Minister just gave to my right hon. Friend the
Member for Warley (). The procurement policy of a
Labour Government would be rooted in getting value for money for
every pound spent. Our national procurement plan would reward
businesses that create jobs and pay their taxes, slash red tape
for disadvantaged SMEs and claw back money from contractors that
fail to deliver.
The statutory instrument is required to implement the new public
procurement regime established by the Procurement Act 2023. It
specifies what information should be included in the notices that
contracting authorities must publish as per the requirements of
the Procurement Act, and where and how these should be published.
Other regulations in the statutory instrument impose requirements
as to how contracting authorities should obtain specified
information from suppliers, and provide further detail about how
certain organisations and contracts are to be regulated. It gives
details about how the Act covers Welsh and Scottish procurement
in relation to reserved matters, and clarifies the disapplication
of the Act in relation to regulated healthcare procurement.
Turning to the specific measures in the regulations, there is
clarification about the various notices that will be published on
the central digital platform. The platform was set up by the
Minister for the Cabinet Office, and I hope it is progressing
well. Notices that must be published there include planned
procurement notices, tender notices, dynamic market notices and
transparency notices. There is further specification of the
information that should be included in the notices, with the
purpose being to increase transparency and make the procurement
regime more accessible to smaller businesses.
Measures that improve transparency and increase access to
procurement opportunities, particularly to small and medium-sized
businesses, are very much to be welcomed. The challenge will be
in how to make these notices and the digital platform as
user-friendly as possible, with all the relevant information
easily accessible and searchable. As we move forward, it would be
helpful if the Minister updated the House on progress in meeting
the requirements of the regulations and on what impact they have
on the number of small and medium-sized enterprises that bid for
contracts. Goods purchased from small and medium-sized
enterprises often mean providing local jobs, and local jobs mean
that people can stay in their home towns and not have to move
away for work, and importantly that they will spend their money
in their local areas thus boosting the local economy.
The regulations also set out the details for supplier information
requirements that will enable the creation of a supplier
information system, the purpose of which will be to hold commonly
used supplier information and allow it to be shared with
contracting authorities, with the laudable aim of reducing the
burden for suppliers, who have to provide the same information in
relation to every procurement. Anyone who talks to businesses
will say just how frustrating it is to have to supply the same
information time and again. That is a particular burden for small
and medium-sized businesses which simply do not have the capacity
to deal with endless red tape. Measures that help to reduce that
burden are very much to be welcomed, but again the challenge will
be in the design and operation of the system. It should become a
useful tool that saves repetition, rather than becoming a burden
in itself, with businesses struggling to upload the necessary
information.
The regulations also specify a list of services that may form the
subject matter of what are called light-touch contracts, which
would enjoy a less onerous regulatory regime, with the aim of
encouraging organisations such as social enterprises and mutuals
to bid for contracts for certain social, health and other
person-orientated services. The key issues will be to maximise
transparency and to ensure sufficient regulation to protect and
get value for money for the public purse while at the same time
encouraging a wider range of organisations to bid for contracts.
The regulations specify that the Act does not apply to what is
termed “regulated health procurement”, which is governed by other
legislation.
The UK's commitments under the World Trade Organisation agreement
on Government procurement require us to have one financial
threshold that applies to central Government authorities and
another for the procurement of goods and services by local
government and wider public sector bodies, as well as a specific
threshold that applies to procurement for what are termed
“works”—construction procurement that reflects the typically
higher monetary values involved in procuring construction. The
regulations therefore set out lists of which bodies are defined
as central Government authorities and construction-related
services that constitute “works”. These regulations set out
further requirements in respect of what happens at the awarding
of contracts and thereafter, with regulation 31 setting out what
the assessment summary should contain, including an explanation
as to why the particular scores were given against each
criterion.
There are some innovative measures, and we welcome those that
help to make the whole process more transparent. Regulation 37
sets out the information required in a procurement termination
notice that is published when a contracting authority decides not
to award a contract, and regulation 40 sets out the details to be
included in a contract change notice, including the grounds on
which modification will be made.
The regulations also change the frequency of reporting on the
prompt payment of invoices by Government bodies from one year to
six months and spell out requirements in respect of the contract
performance notice, including the details required when used to
report poor performance or a breach of contract. The explanatory
notes clarify that these regulations do not include a statutory
review clause, as they do not regulate an activity carried out by
a business for the purposes of the business, but rather that they
place obligations on the public sector. However, feedback and
monitoring are crucial to ensuring both that we are getting value
for the public purse and that the regulations are working
effectively for business, including reducing the burdens on
business and encouraging a wider range of businesses,
particularly small and medium-sized enterprises, to bid for
contracts.
I note that the approach to monitoring this legislation will be
through feedback from contracting authorities, suppliers,
industry representatives and professionals. As I noted earlier in
my remarks, what is important is not just the content of the
regulations but the way in which the requirements are
implemented. The smooth operation of the supplier information
system and the ease of access to the digital platform where the
notices of procurement opportunities will be posted are crucial.
I note that the Government have given the required six months'
notice of the coming into force of the Procurement Act on 28
October, when public bodies and businesses will be required to
follow these regulations. It would be useful if the Minister kept
the House updated about the implementation of the Act, and going
forward, its impact, including, importantly, the impact on the
uptake of procurement opportunities by small and medium-sized
businesses.
4.19pm
Sir (Wokingham) (Con)
It is difficult to come up with a good system that has the right
balance, because the taxpayer's interest is very much in favour
of economies of scale and availability, while the small business
struggles to meet the possible volumes of a successful bid for a
contract and to satisfy all the criteria that the large company
finds easy to manage. I am grateful for the fact that the
Minister and the Government generally have been thinking rather
more about how small business and the self-employed can make a
bigger contribution and how contracts can be broken down into
more manageable sizes, both in primary legislation and now in the
detail.
The right hon. Gentleman is absolutely right on that, but very
often the primes get the contract and subcontract to the SMEs and
put on a huge on-cost and profit margin. Those SMEs are therefore
never able to grow properly, and they are stifled, because
Whitehall prefers to deal with very large conglomerates.
Sir
There will be that bias. Sometimes it is right, and it is always
understandable, but Ministers and, above all, the senior
officials implementing this new policy will have to bear that in
mind. They will have to try to correct for the ease of going for
a large company solution, where all the boxes will be filled
impeccably and all the right things will be ticked, although that
can lead to a contract disaster, because getting the electronic
responses right is not the same as delivering the right good at
the right price in all the right ways.
I have another worry. We are in an era of exciting and rapid
change. Technology is changing even more quickly than over much
of our lifetimes so far, as the Prime Minister was mentioning in
his remarks this morning. None of us can be sure what
opportunities artificial intelligence will produce in wider
digitalisation, but we know that digitalisation will make an
increasing contribution to, and have an impact on, service
provision. So much of government is about the provision of
personal services and administrative services, and so much of
that can benefit from the intelligent application of these
exciting new technologies, but they need careful handling.
The big problem in public procurement is when the innovators are
moving so quickly that the invitation to bid is about things that
are out of date; they are what the system has been used to
handling and the state feels comfortable with. The state can
define the old products and old services perfectly well, because
it has experience of them, whereas maybe what is needed in
certain cases is the innovative product or service. I remember
innovating in industry in the past. Often, we had to be willing
to license a competitor of our own breakthrough, to give people
comfort that there would be some competitive check on costs and
availability. Such things are complicated to model and to build
in to big procurement systems, such as the state. It means that
the state tends to lag and the private sector makes much more
rapid advances, because people take more risk and are prepared to
change what they wish to procure when they see something better.
In the case of the state things have to go through many
committees and many memos, and it is probably easier not to
bother or to wait a few years until something has happened.
I do not have any easy answers. I understand that the Government
and the Minister have the best of intentions, and they have come
up with rules that they think are more flexible, but the proof of
this pudding will be in the eating. I just emphasise that we need
a system that is flexible enough to understand that sometimes it
does not know what it wants, or does not know what is available,
or that something that is available might be better than the
thing people thought they wanted.
My final observation is that we have lost a lot of the
self-employed in recent years for one reason or another, but the
issues over tax status are part of the problem, with the
toughening of the rules over IR35. I worry that a lot of
self-employed people will struggle to get any work from the
Government, because it is much easier for those procuring just to
say, “It's too much hassle; we would be to blame if this person
were taking liberties with the tax system, and although they say
they are compliant and self-employed, we aren't so sure.” Of
course, someone can become genuinely self-employed only if they
win enough independent contracts. If a big part of procurement is
not allowing them to win state contracts, it is much more
difficult for them to become genuinely self-employed.
(Rotherham) (Lab)
The right hon. Member makes a very good point. The self-employed
have been telling me about the amount of administration they have
to do even to be in the running. Also, they do not tend to find
out about contracts. I hope that the regulations will extend
their promotion and the length of time, and that the Government
try to break down those contracts into smaller chunks, so that
small British businesses can genuinely be in with a chance.
Sir
I entirely agree. That is where the more transparent and simpler
system will be very good, and we should give that a good trial. I
am concerned about someone who is genuinely self-employed
struggling to prove that they are sufficiently self-employed, and
whether the state would want to take less risk on that. Again, I
would like the Minister to put a stronger case to the Treasury
that, perhaps, to have more successful self-employed people
working for the state under contract, we need to review how we
enforce and police their tax status.
Mr Deputy Speaker (Sir )
I call the Scottish National party spokesperson.
4.26pm
(Angus) (SNP)
The SNP does not oppose the draft Procurement Regulations 2024.
Their context is a deeply unwelcome Brexit reality from
Scotland's point of view, but they are largely uncontentious and
little more than one would expect under the framework established
by the Procurement Act 2023. However, that framework is
unsatisfactory to some extent, not for what it gives effect to
but for what it does not safeguard against. The Act fails to
mandate sufficient tax transparency for large multinationals
bidding for public contracts—a profoundly basic requirement for
those seeking to profit from public expenditure to be transparent
about their own tax position and, therefore, it is a significant
failure in the framework. The Act also fails to appropriately
protect workers' rights—never more important for workers in the
UK, who face a growing threat to their employment rights, having
been stripped of EU protections. It does not properly uphold the
priority of social benefit from such contract awards.
Vitally, the Act fails to close the loopholes that allowed for
the appalling Tory VIP lane for the procurement of personal
protective equipment during the pandemic. If there is no
institutional learning from that glaring and seismic
misappropriation of public funds, it prompts the question of
whether the omission is by dint of incompetence or by design,
given the repeated denials of this Tory Government with respect
to that particular crisis.
Some underlying reasons for the PPE failures were the lack of
industrial capacity, the complete inability to communicate with
industrial capacity, and the endless reliance on middle men who
rushed off to China. Firms in this country could have done the
job but had no way of getting access, as back-door routes were
used, which dominated a lot of the newspapers.
The right hon. Member made a number of important points, not
least that we allow the atrophy of our industrial base at our
peril, particularly in times of crisis. It unduly compliments the
Government to suggest that there was only an inability to
communicate with ordinary firms in the United Kingdom—I am afraid
that the circumstances around the Tory VIP lane were far more
sinister than that. With that, I will make some progress.
A third of public expenditure—some £300 billion annually—is spent
on public procurement, so it is essential that its regulation is
not simply minimalist administrative housekeeping, but an
ambitious plan to improve public procurement continuously. In the
absence of any such ambition in these regulations, we can clearly
see the sloping shoulders of a dying Administration content to
pass on their responsibility for forging a public procurement
system that benefits taxpayers, local suppliers, industry and
service users alike to the next UK Government—God help us.
The SNP and Scotland more generally must, under the current
constitutional settlement, concede to be bound by the
regulations, for the time being at least. In so doing, however,
we note that the Tory Government promised in 2019 to get Brexit
done, yet they are still fumbling around with fundamental and
basic legislation five years later, trying to implement what was
their pipe dream, but is a bona fide nightmare for ordinary
people across these islands. Still further regulation will be
required to give full effect to the Procurement Act 2023, but it
seems unlikely that it will be the same Government standing there
to advance it.
4.30pm
(Warley) (Lab)
I would like to make a couple of observations before I get on to
the main thrust of my argument.
First, I regard the regulations as a great missed opportunity. It
is not that the actual regulations themselves are not
acceptable—they are probably an improvement—but they do not deal
with a whole number of core failures in public procurement in
this country. We have just discussed the covid era. I had a firm
in my constituency that produced safety apparel for the catering
industry. It knew exactly how to produce gowns; it had skilled
cutters and machinery. There was no way of getting through the
bureaucracy, which of course had been subcontracted to Deloitte,
which also got a massive cut out of it. There was a real failure
to engage with industry and, as the hon. Member for Angus () pointed out, a failure to
maintain the industrial base—although I would gently point out to
my friend that procurement from the Scottish Administration has
not always distinguished itself over recent years either.
The right hon. Member for Wokingham (Sir ) rightly pointed out that very
often Government procurement policy deliberately moves against
SMEs because it aggregates contracts, for example, for repairs
and maintenance in defence. Instead of being done by local firms,
they are aggregated into one large contract, which only the big
national facilities companies are able to do. Of course, they
subcontract out the work and we know—we have just had a
considerable number of reports about defence accommodation—how
woeful their record is on delivery. That is a further problem
that, I regret, is not addressed in the document, or in the
Minister's rapidly delivered speech.
That is the point: there are no penalties for failure. Recently,
the Defence Committee received a letter from the Defence
Secretary saying he cannot, under Government procurement rules,
take into account past performance in assessing a contract. Mr
Deputy Speaker, if you give work to a builder, he bodges the job,
he comes back and tenders with the lowest price and you are
governed by Government procurement, you have to take that, even
though you know the history is that he cannot do the job. We see
that very much in IT contracts, where firms fail time and time
and time again. It is a shame that the right hon. Member for
Rayleigh and Wickford (Mr Francois) is not present because I am
sure he could talk at length about a company that is, rightly,
his bête noire in that regard.
There is a fundamental failure of philosophy at the heart of
Government and the regulations do not address it. That is also
why I think this is a missed opportunity. They are based on a
philosophy and theory that do not relate to the real world. I
intervened on the Minister to talk about trade deals and he went
on about the United States being able to strike particular deals.
The core of international trading relations—and a lot of it that
deals with public procurement is mentioned in the document—is
World Trade Organisation agreements. I accept that there has been
a deep fundamental failing within the WTO, which was to admit
China to the organisation and then not to insist that it followed
its rules, until basically it became too big to fail and too big
to take on. I accept that there was that failure. But every other
major industrial country looks after its own, often very
effectively.
We heard all this during the debates about the European Union. I
used to have to say, both to Eurosceptics and to Euro-enthusiasts
who were ascribing either our problems or our salvation to
Brussels, that the problems were not fundamentally in
Brussels—they were in Whitehall. I remember once saying to a
senior civil servant—a good one, by the way—during an argument
about an issue related to this that, if the British civil service
had fought the corner of Britain as hard as its French, German,
Italian and other counterparts fought theirs, the British public
would have been much more content with the EU. The British
undermined it because they would not be good Europeans: they
would not behave like the rest of Europe.
Let us consider the issue of police vehicles, which I raise
regularly in the House. If we go to Berlin, Paris or Rome, we see
that all their police vehicles—apart from the Carabinieri Land
Rovers—are made in their own countries. If there is free
competition and a superior product is available at a better
price, surely one country should dominate? Not a bit of it.
Another argument that we have regularly concerns the fleet solid
support ships. The Government insist on putting the contract out
to international competition, and the bulk of the ships will be
built in northern Spain. When France and Italy decided to procure
similar vessels, it was made very clear that they had better be
built in yards in France and Italy.
My right hon. Friend is making a very good speech and I fully
agree with what he is saying. One of the ways in which Europe
manages to support its own industry is by applying weighting to
social value, ascribing the highest value to the very act of
providing jobs for local people. That is something that we could
be doing.
It is true that the social weighting applied here is
insufficient, but European countries also send a clear subliminal
message to competitors, putting up, as it were, a sign saying
“Just don't bother.” When Germany did procure a design for naval
vessels from Holland, the prerequisite was that they had to be
built in German yards.
Sir
Is there not also a strong national security argument for
procuring all defence items in Britain and creating a more
competitive market at home to have honesty on prices?
That is exactly right. One of the arguments for buying steel
from, mainly, Sweden—and possibly from France—was “We do not
produce steel of that quality here”, but if we do not provide the
orders for that quality of steel, our plants will gradually stop
producing it, and we will also lose the skills. That has been a
constant row. The same has applied to trains. When I was a
Transport Minister, Alstom came along, having taken over the
Washwood Heath factory, and said, “Our problem is that when we go
to corporate headquarters, we will be told that if we want to
sell trains in France we must produce them in France, and if we
want to sell trains in Germany we must produce them in Germany.
Britain will buy from anyone; where do you think the investment
goes?” That has been a regular theme.
During the period of Labour government—and I fear that it is
probably still the same with this Government —we heard Ministers
say, “We have to abide by these rules because otherwise we cannot
expect other people to do so.” I say, “Join the real world, the
world in which people do fight their corner, the world where
people battle for their corner!” The real, deep irony is that the
failure to protect our industry is also a failure to protect our
industrial communities, and to protect not just the livelihoods
but the life of those communities. We talk about left-behind
towns, which are very much at the heart of this issue, but it has
also happened to quite an extent in America. It drives a populist
feeling that people decry, but which they have been instrumental
in bringing about.
If the argument that we have to follow some theoretical rules,
rather than be part of the practical world, was wrong previously,
which it certainly was, it is even less sustainable now. What the
Ukraine conflict has shown is the need for industrial capacity.
When I say “industrial capacity”, I do not just mean a plant; I
also mean trained personnel. I do not just mean scientists, high
technicians and skilled trades—semi-skilled production workers
with the ability to make the machines work and to turn materiel
out are also a core part of this.
We have seen that drain and drift away, so when we are faced with
an existential crisis and Ukraine is on the frontline for freedom
against an aggressive and assertive Russia, it becomes incredibly
difficult—regardless of whether we will the money out of the
Treasury, which I accept is important—to get production ramped up
because of the lack of skills throughout the economy. I accept
that some of the equipment in the second world war was less
technically advanced, but the allies were quickly able— America
was astonishingly quick—to move civil capacity into war
production. Although we often focus on the “whizz bang” stuff—the
hi-tech stuff—a lot of it is about good machining, which requires
those abilities and that capacity.
When I argue for maintaining capacity in the UK, it does not mean
that we should not co-operate with other countries, but we should
do so on the basis of ensuring that our interests get dealt with
as well, which will be mutually beneficial in the long run. If we
are able to play our part, we will have that greater industrial
capacity, but we cannot be the universal donor. We also have to
have a degree of reciprocation and investment coming into the
UK.
As I said, I accept that the changes introduced by the
regulations are an improvement, but they have still not broken
the psychological grip inside the civil service, which is not
interested in industry and does not rate it, even in the face of
the Ukraine crisis and the world dividing up into trade blocs. I
am asking not for Britain to be an outlier, but for Britain to
become part of the international community, behave like a normal
country and have prosperity spread out much more across the
country. I think it is called levelling up—we even have a
Department that is supposed to be dealing with that.
Mr (Chesterfield) (Lab)
I pay tribute to my right hon. Friend, who has been a doughty
campaigner on this issue in all the time I have been in
Parliament. I agree that we are not looking for British
exceptionalism; we are looking for Britain to catch up with the
kinds of practices that we know are commonplace in many other
countries that are part of the European Union. We need to make
sure that supporting UK manufacturing is part of the policy aims
of our procurement strategy.
I absolutely agree. Hopefully then, we will achieve what Mr
Churchill argued for in the early part of the last century. When
he was Chancellor of the Exchequer, he wanted to see industry
more content and capital less proud. By “industry”, he meant both
firms and the workforce. We would have much more content and
stability in this country if the Government were prepared to use
the enormous power that they have. We often talk about the
Government as a legislator and an administrator, but the
Government as customer is enormously important. That can drive
progress and change, but it can also drive equity. I ask the
Minister to reflect on that and, in the short time left for this
Administration, to start a change of thinking in Whitehall to
make it easier for us to play a proactive role rather than a
merely reactive one. The prize is enormous, both for our
prosperity and for our content.
4.44pm
(Rotherham) (Lab)
I thank the Minister for bringing forward the regulations. I know
that he is passionate about this area and really wants to do the
best for British businesses, so I hope he takes my comments as
helpful, rather than as a challenge—or perhaps as a positive
challenge.
Every year, the Government spend over £300 billion on public
procurement. A significant proportion of that goes to
multinational corporations, and in 2020 alone £18 billion of
public funds went to overseas suppliers, rather than supporting
their UK counterparts. A consequence is that SMEs are effectively
shut out of the public procurement system, with big corporations
winning 90% of contracts deemed suitable for small and
medium-sized businesses. This means that SMEs miss out on £30
billion-worth of contracts annually, and despite repeated
Government promises to buy British food, this is just not
happening.
British businesses are being let down by the procurement system.
The British steel industry, of which Rotherham is a proud hub, is
one of the industries suffering from this lack of Government
support. The UK steel industry employs over 40,000 people and
directly contributes £2.9 billion to the economy. However, steel
contracts continue to be handed out to foreign companies. The
British Constructional Steelwork Association's analysis of steel
use in the HS2 project found that only 58% of steel contracts
were awarded to British suppliers, despite the UK steel industry
having the capacity to carry out 100% of the work.
For these reasons, I was proud to bring forward my private
Member's Bill, the Public Procurement (British Goods and
Services) Bill. It was developed with a cross-sector group of
experts, to whom I pay tribute. The Bill sought to encourage the
Government to award more public contracts to British farmers,
British manufacturers and British producers by increasing
transparency regarding contract awards. This would be done by
requiring contracting authorities to publish in contract award
notices how they had complied with various requirements in the
Bill.
I am therefore genuinely pleased to see that a large section of
the regulations is dedicated to contract award notices. Notably,
I welcome the inclusion of pipeline notices, planned procurement
notices and preliminary market engagement notices, which will
allow businesses to better prepare for bids for public contracts.
During the development of my Bill, I was told that publishing
contract award notices was time-consuming and laborious. That
might be true, but the rewards to British businesses surely
outweigh the admin, so I am hopeful that today's legislation will
open up more public contracts to SMEs.
However, I reiterate a point made by my hon. Friend the Member
for Llanelli (Dame ): we must make sure that the hub is as easy and
accessible as possible. The regulations are not perfect and we
are keen to see improvements. I would like to see the inclusion
of more measures to back British farmers, uphold good employment
practices and better support SMEs through public procurement. As
the Minister will know, UK Departments currently have to report
where steel is procured from. That is a welcome step, and I
firmly believe that the UK food industry would benefit from a
similar intervention.
The UK public sector spends around £2.4 billion a year on food
procurement, yet there is no accurate measure of the amount of
food procured from British suppliers, which is of huge concern to
our farming industry. Due to the lack of central Government
policy on farming and food, public bodies are effectively
establishing their own policies, potentially to the detriment of
British farming. To address these issues, my Bill would have
compelled contracting authorities to publish what proportion of
the food being procured originated from UK suppliers. This was
designed to encourage more public contracts to be awarded to our
farmers.
The economic benefits of backing British farming are obvious, but
there are also ethical benefits. We are a world leader in animal
welfare standards, and an increased focus on buying British food
would contribute to cruelty-free procurement becoming the norm. I
was proud that the National Farmers Union, the Countryside
Alliance and the Royal Society for the Prevention of Cruelty to
Animals helped me to develop my Bill, and I hope that the
Government will look favourably on this specific measure and
implement it in the future.
I am disappointed that the regulations do not include an
obligation for contracting authorities to support good employment
standards, good working practices and social values. I worked
with the TUC when developing my Bill, and it informed me of the
dire state of some employment standards in public procurement. To
remedy this, I worked with the TUC on a measure that would have
encouraged the awarding of public sector contracts to employers
that treat their staff well and that would have stopped bad
employment practices, such as fire and rehire, being tolerated
within public procurement.
My Bill would have required contracting authorities to consider
how they might act to support good employment standards and
working practices, and it would have placed an obligation on them
to include in contract award notices how they have complied with
this requirement. I urge the Minister to reconsider and to
include this in the regulations.
Despite making up 99% of UK businesses, SMEs do not receive their
fair share of public contracts. The National Federation of
Builders told me that one of its members has not secured a public
sector contract for over a decade, even though it is well
qualified to deliver and has kept on applying. The member found
the hugely time-consuming process off-putting, and when it did
not receive the contract, it received no feedback on why, which
would have helped it to make the next application better.
Sadly, that situation is replicated across many sectors. I
therefore ask the Minister to consider implementing a requirement
for contracting authorities, when procuring goods and services
from SMEs, to consider how they might improve an area's wellbeing
and to report on how they have complied with this obligation.
When spending taxpayers' money, as much as possible should be
spent on supporting British businesses and British jobs, as other
countries do with their own industries. We were told that British
businesses would be the first in the queue for UK Government
contracts once we left the EU. The 2019 Conservative manifesto
even stated, with regard to food procurement:
“When we leave the EU, we will be able to encourage the public
sector to ‘Buy British' to support our farmers and reduce
environmental costs.”
That is yet to happen, so can the Minister confirm how the
regulations will seek to address the barriers specifically around
farming?
I urge the Government to implement the changes that my hon.
Friend the Member for Llanelli and I have outlined today, because
we all want British businesses to do much better. I wrote to the
Minister, at a previous Minister's request, about my working
party coming to meet him to discuss how guidance could help
British businesses to secure these contracts. I have yet to
receive a reply, and I would be very grateful if he could provide
one.4.52pm
(Strangford) (DUP)
I thank the Minister for his opening speech, in which he
mentioned all the devolved nations. It will be no surprise to him
that I will focus on Northern Ireland.
The previous speakers all spoke about the importance of public
procurement to the economy of the United Kingdom of Great Britain
and Northern Ireland. We are all very aware that the Procurement
Act 2023 is due to come into force in October, with secondary
legislation required to implement certain of its provisions. I
again wish to highlight the importance of the devolved nations'
specific circumstances. The Act applies to us, and it is
important that Northern Ireland has as much access and input into
the United Kingdom's procurement process as possible. The hon.
Member for Rotherham () spoke about SMEs, of which
we have an abundance in my Strangford constituency and across
Northern Ireland, and it is important that they have that access.
They are the backbone of business.
I have always been a big supporter of securing locally sourced
British contracts, and that has been heightened since we
officially left the European Union. It is about securing more
jobs for our constituents, strengthening our economy across the
United Kingdom of Great Britain and Northern Ireland, and
ensuring good value for money. Northern Ireland has witnessed
that our shipping costs to sustain contracts with businesses
inside the United Kingdom are considerably more expensive than in
the other devolved nations. It seems that Northern Ireland is at
a disadvantage. Perhaps the Minister can tell us what will be
done to address that. Understandably, we cannot always rely on a
train or lorry journey, but we want to do our part and play our
role in the public procurement process, so I ask the Minister
what more can be done to support shipping affordability for
east-west contracts.
During the passage of the Northern Ireland Protocol Bill through
this House, the Democratic Unionist party put great emphasis on
the importance of east-west connections economically, culturally,
historically and financially. To build on that, we believe there
should be a focus on east-west contracts. The Minister who
responded at the time indicated that that was what the provisions
would be about, but it is important for the Minister before us
today to tell us more about what that means.
There have been issues with international procurement in the
past, in respect of where we have secured certain contracts—for
example, in ensuring that the materials we rely on are not
subject to human rights violations such as forced labour, child
labour and unsafe working conditions. Such violations have been
witnessed in the clothing retail industry to produce affordable
clothes, which are incredibly popular but often have a moral
price that is too high. I declare an interest as the chair of the
all-party parliamentary group on international freedom of
religion or belief. Human rights and freedom from persecution for
religious minorities across the world are very important to me.
In this House, we must ensure that we are not acceding to the
purchase and manufacture of affordable clothes when their price
is morally too high. There are many opportunities for the United
Kingdom to pave the way and to be a front runner in supporting
local, domestic procurement contracts in many different
industries, such as health, defence, apparel, transport and much
more.
Northern Ireland seems to be on a different level to the rest of
the United Kingdom. The Minister indicated his wish to address
that issue, and I look forward to hearing what he will say.
Northern Ireland needs equality and a level playing field. The
opportunities for Northern Ireland must be the same as those for
Scotland and Wales, and for all of this great country of England
as well. It is no secret that we already face a greater expense
in shipping costs, so I would be grateful if the Minister could
clarify what is being done to support Northern Ireland in
relation to that.
Mr Deputy Speaker (Sir )
I call the Leader of the House, .
4.57pm
Gosh—the Leader of the House? One day, Mr Deputy Speaker.
It has been a pleasure to listen to hon. Members and to hear the
widespread support for the regulations. There is widespread
recognition that they are a great improvement on the regime that
we have swept away. They form part of one of the landmark pieces
of legislation since our departure from the European Union.
We heard support from across the House for a procurement system
that greatly supports small and medium-sized enterprises. As I
said in my opening remarks, that was at the forefront of
Ministers' thinking as the Procurement Bill was devised. It was
very much in the minds of the businesses and the contracting
authorities that we spoke to as the legislation was put together.
The right hon. Member for Warley () gave an excellent speech and
referred to Churchill's wonderful phrase that industry should be
“more content”. From the extensive consultations we have
undertaken to prepare the legislation, we know these regulations
will make “industry more content”, and that this is very much
what businesses have been asking for and looking forward to.
There are a number of things that will help small and
medium-sized enterprises, not least transparency and our new
online system. The hon. Member for Llanelli (Dame ) said, quite rightly, that the system must be easy
to use. One of my first jobs as an adviser to Government was in
child protection. I remember the disastrous integrated children's
system that was in place under the last Labour Government, which
took hours upon hours out of social workers' time. It was
dreadful because it took them away from working with children and
meant they had to follow a very bureaucratic process.
We must be committed to ensuring that people are able to enter
data and use the system without taking away from the most
important part of their job. The Procurement Act, the regulations
and the supporting documentation also support social value. The
national procurement policy statement, which we have published,
is keen to make sure that we do not remain obsessed with the most
economically advantageous tender, but instead move to the most
advantageous tender. That is a broader understanding of what is
useful to contracting authorities and to society, and enables the
consideration of issues such as local jobs and local skills.
The right hon. Member for Warley mentioned skills, and he was
quite right to do so. When I was Minister for Apprenticeships and
Skills, I was very keen to make sure that we were building up
high-quality, internationally competitive apprenticeships, which
played to the skills that were going to be needed in the areas in
which they were provided.
The right hon. Gentleman also spoke about levelling up. I saw one
of the most powerful examples of levelling up when I was a
Minister in the Department for Education. The Government created
a freeport on Teesside, which was part of our job. The excellent
Mayor of Teesside, Lord Houchen, who I am pleased to say has been
wonderfully returned by his constituents, worked with business to
build a hydrogen plant in the freeport. The deal that was struck
was that the hydrogen plant would support local colleges in
providing the high-quality apprenticeships that would get young
people—and not so young people—the jobs in that community. That
is levelling up: all parts of Government—both from Whitehall to a
local level—working with providers of local skills and industry
to make sure that people can be a part of the success story of
their own communities. I am very proud that it is this Government
who have helped to deliver changes such as this.
Will the Minister give way?
I am always delighted to give way to the right hon.
Gentleman.
I thank the Minister for his positive remarks.
Cannot Government, as customer, prescribe ratios of
apprenticeships within the contracts, particularly construction
contracts, and stipulate, as was done at the Olympic Park, that
if a company moves off site for whatever reason, including when a
contract moves into a different phase, and a new company comes
in, there is an obligation to transfer the apprentices across?
That would be building a sustainable base for the future.
I am sure the right hon. Gentleman knows that that is often the
case. We do have requirements for apprenticeships to be part of
major Government projects. He quite rightly spoke about
Government as an intelligent customer—intelligent not just in
terms of getting the best price, but of getting the best overall
value. I say to him again that the idea of having a system of
most advantageous tender, not just most economically advantageous
tender, was always at the heart of these regulations.
The right hon. Gentleman should look at the excellent work being
done by the Crown Commercial Service. By bundling together
purchases made by different parts of Government, we can make sure
that we get best value—I mean value in the broadest sense. In the
Cabinet Office—perhaps one of the less glamorous areas of
Government—in which I am proud to serve, that work is under way,
already saving British taxpayers billions of pounds and making
sure that we have a better and more holistic view of what
Government spend can do.
Work such as that, alongside legislation such as this, means that
we are building a system in which not just industry is content,
but Government and the taxpayer are too, as well as the small and
medium-sized enterprises and the communities in which they sit. I
recommend this motion to the House.
Question put and agreed to.
Resolved,
That the draft Procurement Regulations 2024, which were laid
before this House on 25 March, be approved.
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