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 Nia Griffith): 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.
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