Health and Social Care Bill — Report (3rd Day) (Continued)

Part of the debate – in the House of Lords at 10:45 pm on 27th February 2012.

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Photo of Lord Mawson Lord Mawson Crossbench 10:45 pm, 27th February 2012

My Lords, I shall also speak to Amendment 64B. Many fine words have been spoken by this and the previous Government about the important role that social enterprise and the voluntary sectors now need to play in our changing economy, particularly in the NHS. Indeed, on 25 January, the Prime Minister spoke to exactly this subject in the other place, and in 2010 Secretary of State Andrew Lansley said during a speech to the voluntary sector leaders that he was assisting in the creation of the,

"largest social enterprise sector in the world".

Indeed, he said that it would mean opportunities for this sector,

"at every stage in the process".

These are very fine words, with which I agree. These two amendments are intended to turn these aspirations into practice on the ground up and down this country, because it is simply not happening when one looks under the carpet and at the fine detail. Whatever we think the numbers produced by civil servants tell us, something quite different is happening on the ground in practice.

When this matter raised its head in Committee, I reminded your Lordships' House of our practical experience in Tower Hamlets, where the social enterprise the Bromley by Bow Centre-I declare an interest as its founder and president-had competed with a large multinational company to run a local health centre. Having invested many tens of thousands of pounds in the process, the centre lost the bid on cost.

Fair enough, one might say: that is life. Because I was conflicted at the time, I kept out of the process but, as soon as it had finished, I realised that a very large company had undercut the centre and come in at a price that was simply not sustainable for either it or the patients, and that the inexperienced procurement officers in the PCT had no idea about what they were dealing with in practice-they had never run a health centre. Lo and behold, very quickly the company was adding new variation orders to the contract to up its value, and by year 3 asking to be relieved of its responsibilities under the contract.

The centre now runs the service, having wasted a great deal of money as a charity in the application process. The company was good to deal with, but the process was hopeless. One can imagine the messiness this contractual process created in a local housing estate which had had poor health provision for years, because in practice the local GPs were not held accountable. This was not good for patients and it was certainly not good for business.

I recognise that this first amendment has limitations as to what it can achieve in practice but, because I am not allowed under competition law to put down an amendment that guarantees the social enterprise sector a fighting chance of winning a percentage of contracts, it is an attempt to push the boat along. It is a piece of a bigger jigsaw.

What I have to say through these two amendments builds on the practical points that I attempted to make in my Second Reading speech on 27 January on the Public Services (Social Value) Bill. It is good to see in his place the noble Lord, Lord Newby, who led on this Bill in your Lordships' House. These matters are all connected with the question of how in practice we add real social value to the processes of public sector procurement, and today we are particularly focusing on the health service.

I noticed in a recent newspaper article that Stephen Allott, who was appointed by Francis Maude in February to give smaller suppliers,

"a strong voice at the top table", told a journalist recently that work is well under way to create a fairer playing field for smaller businesses. Of course, many of these smaller businesses are social enterprises, because social enterprises are businesses. I welcome this but Mr Allott conceded that the slow pace of change meant that many companies were still unable to take advantage of the opportunities which Francis Maude promised them and continued to grapple with major hurdles, such as lengthy and burdensome pre-qualification questionnaires or PQQs, high financial thresholds and high levels of liability insurance. Mr Allott said that he continued to hear about problems faced all over the country in both central government and the wider public sector. Mr Allott also rightly said that a cultural change among the 6,000 procurement professionals in central government was likely to be the biggest barrier to SME involvement. I agree.

On 20 November, Francis Maude also announced a plan for a commissioning academy. On 7 February it was announced that a £7 million leadership academy, run by Oxford University's Saïd Business School, would be set up with a focus on large-scale infrastructure procurement-for example, a new rail route to Birmingham and so on. We are told that the top 50 civil servants will attend. Oh dear! If the process for the procurement academy gets it so wrong, it shows the depth of the problem. The chosen focus is solely on high-profile mega-contracts and a handful of senior staff. While we clearly need to get these right as well, where is the focus on the 6,000 central government staff and, I believe, the 60,000 local authority and health authority procurement staff? This is where the focus is needed on this detail, because these are the people who spend large amounts of taxpayers' money, which has a profound implication for local communities across the country. Billions of pounds-worth of contracts are procured through them, and these are the people who in my experience keep getting it wrong at the front edge and often have a very limited understanding of what social enterprise is about.

More seriously, my colleagues and I are trying to do what we can to help the Government with these changes. Indeed, I am talking to the HR department of one central government department in Whitehall at the moment to try to second staff to take a view up the telescope and discover for themselves, for example, the unintended consequences of unreasonably high levels of liability insurance, and here I suspect that I must declare an interest. These two amendments are trying to encourage government to take a few further practical steps down this road. The Minister knows, as we all do, that there is still a long way to go.

The present procurement processes are broken and affect not just social enterprises. A pharmacist whom I know in an inner-city area has a highly innovative approach. He has been mentoring young people from a local school in the middle of a housing estate, some of whom have gone on to read pharmacy at university. However, he is finding that his approach and skills are not recognised by the local health service. The PCT recently ran a procurement exercise for a new pharmacy nearby. Clearly, it would have been to the benefit of the local community and local health services if this pharmacist had been able to extend his work, take over this new outlet and grow further linkages with social enterprises locally. Clearly the PCT cannot just give him the contract but you would have thought that it might make sure that he knew about it by perhaps putting him in touch with someone who knew about PQQs, or ensuring appropriate weightings for added-value services and an in-depth knowledge of the local community. Not a bit of it. The PCT did not even tell the pharmacist about the PQQ process until 24 hours before the deadline. He thus did not even get shortlisted after the PQQ stage.

That says everything that is wrong with public sector procurement and why I have little confidence that any of the legislation, from the Localism Act to NHS reform, will achieve very much in practice if there is not a profound culture change in the way in which procurement teams think and operate. By the way, I could also if there was time, which there is not, illustrate the same problem from the major corporate's point of view. That very good company has taken the time and trouble to grow a partnership with the local social enterprise over many years. The company has understood the arguments as to why it makes good social and business sense to give greater weightings to the development of skills in local communities, only to find itself losing contracts because the procurement team in one major contract, despite all the talk in government, was simply ticking boxes and had no idea what the words meant in the real world on the ground or how meaningless the weightings were in practice.

I am sure that the civil servants who then gathered the numbers together in this contract felt that the procedures had been followed to the letter and every box was in fact ticked. In reality, something quite different happened. Perhaps some of us could offer some support to the NHS in running another procurement exercise, with the goal this time that when the PCT or its successor body commissions another pharmacy the staff get out of the office and discover the local context in which they operate and respond to it, and incidentally improve the quality of their working lives in the process by getting to know better some of the patients and professionals in the area.

I know from experience how well-meaning speeches can appear to press a green button in No. 10 or the Department of Health only to find that what happens in practice down in the machinery of government is something quite different. Unintended consequences are very real in this area of the machinery of government. We all know that healthcare markets are in their infancy. Philip Collins rightly said in the Times recently that they need to grow. It is time for many of the people writing to me to do what Mr Collins suggests and put aside sentimentality about the NHS and embrace patient choice, otherwise those who profess to be angels protecting the NHS will kill it. Social enterprise is up for this journey and wants to help and work with this and any successor Governments. Healthcare markets in England are in their infancy with regard to both supply and demand sides of the equation but both are underdeveloped. We need competition but it needs to be a level playing field based not on theories or half-baked notions of fairness and equality but on real practice.

To tackle this we need more than grants to build capability in the social enterprise sector; we need fundamental change in the procurement culture of the NHS. It is about more than just creating guidelines. It is much more fundamental than that. These two amendments offer the Government a few further pieces of the jigsaw and seek to help Ministers create more social value from public service procurement. I beg to move.