Trade Bill - Committee (1st Day)

Part of the debate – in the House of Lords at 5:30 pm on 21st January 2019.

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Photo of Baroness Fairhead Baroness Fairhead The Minister of State, Department for International Trade 5:30 pm, 21st January 2019

My Lords, we have discussed a number of elements of the GPA, but at its heart it opens up mutually a government procurement market among its parties. That has come about as the result of a number of rounds of negotiations. As I stated earlier, the parties to the GPA have now opened up procurement activities worth an estimated £1.3 trillion annually. This benefits UK businesses and the public sector, as well as our consumers.

Amendment 4, tabled by the noble Lord, Lord Stevenson of Balmacara, seeks to make provision for regulations to be made when implementing the UK’s accession to the GPA that would compel procurement entities which are part of Her Majesty’s Government to include various standards and obligations in their GPA-covered contracts. I understand the reasoning behind the amendment, but the Clause 1 power in the Bill is to implement our current accession to the GPA on the basis of our current commitments, rights and obligations. This is to ensure—I beg the leave of the noble Lord, Lord Fox, once again—continuity for UK businesses, public entities and our partners. We are not seeking to change any of the rights and obligations that procuring entities currently have, nor are we seeking to implement new or future changes to the procurement rules, which is what this amendment seems intended to do.

The Government have been clear that they will maintain the current levels of protection. Indeed, my right honourable friends the Prime Minister and the Secretaries of State at Defra and the DIT have made public commitments to this end. Section 8 of the withdrawal Act will bring all existing regulations into UK law, and our commitment to international standards remains unchanged. These standards include those on the environment through multilateral environmental agreements; labour rights through the International Labour Organization fundamental conventions; and human rights and equalities legislation. The noble Baroness, Lady Young of Old Scone, discussed some of these standards and I believe that we will consider them in more detail in the fifth group of amendments. I will say only that standards are important and that we are aiming to maintain them.

Procuring entities are able to apply their own additional measures of environmental, social and labour standards to contracts, and in fact they do so regularly. Membership of the GPA does not prevent standards being applied to contracts. The Public Contracts Regulations 2015 allow such standards to be applied where they are relevant, proportionate and consistent with the GPA; for example, a recent contract for the refurbishment of Quarry House, the home of the Department of Health and Social Care, included a requirement for sustainably sourced furniture.

There are other means available to the Government to achieve the effect that the noble Lord is seeking. The Chancellor of the Duchy of Lancaster announced in June that the Public Services (Social Value) Act 2012 will be extended in central government to ensure that all major procurement projects explicitly evaluate social value. We will require all departments to report on the social impact of major new procurements. We will train 4,000 commercial buyers on how to take account of social value. The Government are already able to issue public procurement notices which set out our policy on certain aspects of procurement, and these are binding on all government departments. I hope that the noble Lord will be reassured to hear that.

The UK has been a participant in the GPA since its inception in 1994. In the nearly 25 years since then, throughout Governments led by various parties, the UK’s procurement rules and regulations have allowed procuring entities to maintain choice in their contracts. I hope that the Committee will agree that public procurement notices provide the right balance between ensuring that government departments follow appropriate standards and enabling them some flexibility to exercise choice.

Finally, the restriction of this amendment to making provision relating only to GPA contracts risks having the effect that GPA contracts might be subject to different rules from other procurement contracts. That would not be the aim of this Government for two reasons. First, divergent procurement regimes would impose a considerable compliance burden on public bodies, with the attendant risk of legal challenge. Secondly, it may even be unlawful in so far as it could result in the differential treatment of suppliers from GPA countries versus suppliers from countries with which we have other international obligations and agreements.

Amendment 5, tabled by my noble friend Lord Lansley, seeks to add an additional clause to the Clause 1 powers which dictates that the Government must include a report making clear a strategy to ensure that one-third of public procurement contracts are won by small to medium-sized enterprises—SMEs. An appropriate authority would then be required to attempt to introduce exemptions to the UK’s market access offer in order to achieve the targets set out in that report. I have spent most of my career in business and I utterly appreciate the importance of SMEs to our country; they are without doubt the lifeblood of our economy. I also understand that the amendment seeks to ensure that public sector contracts are won by SMEs whenever possible and that we continue to support these enterprises to grow. However, as my noble friend Lady Neville-Rolfe said, we believe that this Bill and the GPA are not the way to achieve that.

I reassure the Committee that the GPA does not prevent SMEs winning UK public sector contracts, nor does it prevent public procurers from choosing to introduce measures to increase SME wins. Over the past seven years, the Government have implemented a wide range of measures to open up the way they do business to make sure that small companies, SMEs, charities and voluntary organisations are in the best possible position to compete for contracts. We know that there is still further work to do, which is why the Government have set a target of 33% of spend with SMEs by the end of this Parliament. The noble Lord, Lord Davies of Stamford, correctly highlighted the complexities in setting targets but, as I said earlier, I think that this debate will be helpful in producing valuable input and suggestions for how we should think about the future, if not in this Bill.

My noble friend Lord Lansley talked about his ideas and how we could implement them. My noble friend Lady Hooper talked about the skills that we will need in languages and so on, while my noble friend Lady Neville-Rolfe talked about enhancing the process. My noble friend Lord Livingston talked about recognising and engaging with SMEs. I take my hat off to him for all the work that he did when he was Trade Minister. I hope he knows that we are trying to put in place policies that will help SMEs. My noble friend Lord Risby does outstanding work as a trade envoy. He talked about other ways of looking at trying to enhance the attractiveness of opportunities for SMEs. Why is this continuity so important? I will reflect on those suggestions, and my door remains open for other suggestions but, going back to the comment by the noble Lord, Lord Fox, this is about continuity.

The GPA is a great benefit to SMEs in ensuring access to public procurement contracts. Since 1994 it has opened up legally guaranteed access to procurement contracts. The GPA operates in a spirit of co-operation and transparency, and the UK must maintain its current open offer in order for SMEs in the UK to continue to benefit from open markets abroad. Indeed, the Federation of Small Businesses has said it is essential that the UK is able to become an independent member of the GPA to allow small businesses continued access to government contracts and procurement opportunities. UK SMEs are competitive abroad and their goods and services, as I know at first hand—it is a real privilege to be able to represent and meet some of them—are in enormous demand globally. We wish to ensure that through the GPA they continue to enjoy legally guaranteed access to foreign procurement markets and that we can continue to help them grow. We continue to be committed to our one-third of spend on public procurement for SMEs by the end of this Parliament. I hope that this provides some reassurance to the Committee and the noble Lords who tabled the amendments, and I ask the noble Lord, Lord Stevenson, to withdraw his amendment.