My Lords, Amendment 5 is in my name. At the risk of being chided gently by the noble Lord, Lord Stevenson, to an extent I guess it must be regarded as moving from continuity. We will inevitably enter a series of such debates, but this Committee will be none the less useful for at least exposing some of the issues that policymakers will need to consider as they look at using the powers that we propose to give the Government.
Amendment 5 is intended to reflect that under the government procurement agreement, a number of other countries—not the European Union—take the opportunity to put in exceptions to their procurement arrangements that are consistent with pursuing objectives for promoting small and medium-sized enterprises in their own economies. I suppose that the most prominent such example is the Small Business Act in America. Those countries have done this because, in certain circumstances, it can lead to some discriminatory behaviour on the part of government entities undertaking procurement. I freely acknowledge that the European Union does not do this; essentially, because it takes the view that it has created EU public procurement rules that are intended to be wholly non-discriminatory. Those are non-discriminatory between all 28 member states and, by extension, the view the EU took was that it would be unreasonable for it to attempt to discriminate between EU and non-EU countries in taking advantage of the general procurement agreement.
However, if we are to pursue the strategy of promoting small and medium-sized enterprises in the way that the Government have committed to doing, there is, by extension, the possibility of some discrimination on the part of government entities in order to achieve that. Strictly speaking, this is not necessarily discrimination between UK SMEs and those from other countries, although, in practice, exceptions have been put down because that is more likely than not to be the case when pursuing this kind of proactive strategy to increase SME procurement in certain sectors. As I said, the Government have an objective, which, if I recall correctly, changed in the 2015 manifesto from 25% to one-third. The last figures I saw showed that in 2017 central government procurement had reached 22.5%. I am sure I shall rapidly be told that it is much higher in Scotland; that was certainly made clear in the debates in another place. In a sense, that is not the point. The Government have a strategy and a target of one-third, which they have not yet reached.
Before someone astutely points this out, the amendment must, of necessity, relate to procurement that is affected by the government procurement agreement, which is a subset of total public procurement. For example, the Ministry of Defence will largely be outside the GPA and, on the last figures I saw, its SME procurement was 13%. There is certainly an issue about how the Government are going to achieve their overall strategic objective, not least in working with the Ministry of Defence to ensure that, although many of its lead contractors are large companies, those companies engage small and medium-sized businesses as part of their procurement process. The figure of 22.5% that I referred to is both direct and indirect spending and so will include subcontractors.
The purpose of the amendment is to say that we should revisit the question once this provision is in force and we are in the GPA on our own account. It does not actually require the Government to enter an exception to the GPA for the purposes of this target, but it does ask them to go away and think about whether we need to. It asks them to look at the strategy and how we are proposing to meet it and to take account of the devolved Administrations—not telling them what to do but taking account of how they propose to act. On the basis of that, they should decide whether an exception to the GPA’s schedule is required in order for us to meet that strategy. I have not included it, but it would clearly be appropriate for the Government both to consult on that and, in the fullness of time, to come back to Parliament and ask its view on whether or not the strategy needs to be pursued by such an exception.
I will be straightforward with my noble friend. I am not looking for a change to the Bill. I am using the amendment to extract from the Government a commitment that this is something that needs to be looked at. When one is participating in the GPA as one member state, the provisions of our own SME strategy might be distinct and different from the way that the European Union has related to SMEs. I declare an interest as a director of Low Associates Ltd, a small business which contracts to the European Commission.