Government Contracts

– in the House of Commons at 12:00 am on 16th May 1978.

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4.0 p.m.

Photo of Sir John Cope Sir John Cope , Gloucestershire South

I beg to move, That leave be given to bring in a Bill to regulate Government contracts; and for connected purposes. The purpose of the Bill is to stop Governments from using the purchasing power of the public purse in a discriminatory manner for their own purposes without the express approval of Parliament. It seeks also to provide proper controls over the operation of discriminatory powers if Parliament should, in the future, approve such powers for some purpose. Obviously, the immediate example I have in mind is the pay policy and the enforcement of the so-called voluntary pay policy, but the Bill covers any discrimination.

In my view, public servants should make the best buy they can when purchasing the items that the Government need, and do nothing else at the same time. If a Minister or an official were to discriminate in favour of a particular firm out of a mere preference for one firm rather than another, we should all rightly be horrified and suspect corruption. Indeed, the black list system which has now been adopted by the Government was anticipated by the Royal Commission under Lord Salmon on the standards of conduct in public life. It chose as an example of possible corrupt practice the refusal to include a company on a list of suppliers invited to tender for a particular contract. Naturally, it was concerned that such a practice should not occur: and we, too, should be concerned.

Therefore, Part I of the Bill would make it clearly illegal for a Minister or an official of the Government to award or fail to award a Government contract on any ground other than the fitness, having regard to all the circumstances including price, of the goods and services to be supplied. The Bill would provide for fines related to the size of the contract involved.

If we in this House do not stamp on this practice now, I believe that the practice will increase. Indeed, even since I put this motion on the Order Paper the required 21 days ago, a further extension of the practice has been discovered. The case of GEC-Schreiber is now public knowledge. It seems that that case may be illegal under the existing law. It concerns discrimination under the Industry Act and would not be covered by my Bill but is covered by other legislation.

I believe that the discriminatory awarding of contracts without parliamentary permission is a disgraceful constitutional practice. If the Government argue in a particular case—as they do now concerning pay policy—that it is the best or the only way to achieve some policy, let them come to the House, and get approval.

A few minutes ago the Prime Minister seemed to be saying that discrimination in favour of buying British might be a good idea, particularly in the context of the aircraft industry. Those remarks surprised me, because it has recently come to my knowledge that Customs duties at present actually discriminate against British Airways buying British aircraft and in favour of that corporation buying American aircraft. That is a matter which I am attempting to pursue in another manner and which I cannot pursue today.

Part II of the Bill would come into play if Government purchasing were to be used to discriminate at some time in the future. It would provide that any Department or office of the Government which legitimately discriminated would have to be the subject of a special report each year by the Comptroller and Auditor General in which he set out the additional cost of discrimination, and such costs would count against the estimates of the Department whose policy was supported by the discrimination, and not the Department which signed the contract.

I believe that it is important that the House and the public should realise that discriminatory Government contracts cost money and that they distort the figures of Government spending on the various programmes. I give a hypothetical example. Let us suppose that the DHSS is stopped from buying some hospital beds from the supplier who submitted the lowest tender because he is not complying with pay policy. Three consequences follow. First, it benefits another supplier who pays lower wages but charges higher prices, so distorting competition in favour of the less efficient. That is an inevitable consequence of the policy. Secondly, it increases Government expenditure in total. Thirdly—this is an important consequence—it increases National Health Service expenditure in particular, although that extra expenditure is designed to assist not health policy but economic policy.

There is a concealed virement or transfer of money voted for one purpose to another purpose. Normally, that is not allowed. Incidentally, given cash limits, the result is also a reduction in the amount that can be spent on health care.

I hope that the Bill will appeal to Members in all parts of the House. I think that it should appeal to the nationalists, who do their best to identify supposed discrimination in the system against Scotland and against Wales. The Bill would control any such discrimination if it were to occur. The Bill also should appeal to the Liberals—if they were here—as being an extension of the careful accounting bequeathed to us by the Gladstonian tradition. I hope that the right hon. Member for Down, South (Mr. Powell) and his colleagues will likewise support it for the same reason.

The Bill should appeal to those Labour Members who dislike enforced pay policies. For the same reason it should appeal to the TUC, which is against such policies. It should appeal to the CBI, which last week called for a larger role by the Commons in the creation of pay guidelines. It should even appeal to the Government. They—I am sure that they realise it—have got themselves into a grave constitutional difficulty and my Bill would get them out of it. Part II, in particular, would provide machinery for the Government to do legally, and under proper control, that which they are now doing unlawfully. I therefore hope that they, too, will support my Bill.

It is therefore with every expectation of a clear run for the Bill through to the statute book, even at this stage of the parliamentary year, that I present this Bill. On that basis I ask leave of the House to introduce the Government Contracts Bill.

Question put and agreed to.

Bill ordered to be brought in by Mr. John Cope.