My Lords, Amendment 38, on helping small business, would free up procurement for those businesses with a turnover of under £5 million. I am particularly grateful for the support of my noble friend Lady Noakes, and I am glad of the opportunity to endorse her review amendment, Amendment 534, which she will introduce later.
I shall also speak to my Amendment 50, which aims to keep the bureaucratic burdens on small businesses as low as possible, and to Amendments 97 and 100, which seek to exclude small businesses from complex competitive procedures. Finally, I will also speak to Amendments 290 and 295, which seek to exclude SMEs from the bureaucratic burden of cross-compliance in Schedules 6 and 7, which give long lists of reasons for excluding suppliers from bidding.
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I know from experience what a deterrent effect these schedules would have. Noble Lords will know what a nightmare of bureaucracy banks and financial service accounts have become, forcing costs and red tape on customers so that they can show their compliance and innocence. I believe the new schedules could lead to the introduction of similar tick-box requirements across all procurement, stretching right across the firms or social enterprises concerned. This will certainly deter new suppliers, discourage existing ones and introduce bureaucratic delays into procurement when the opposite is what we need. There is a cost to every compliance procedure, and we need balance.
My amendments are probing in nature, but serious in intent. I am keen to work with the Government and across the Committee to make the Bill more SME friendly. The Minister said at Second Reading that the Bill will
“more effectively open up public procurement to new entrants such as small businesses and social enterprises, so that they can compete for and win more public contracts”.—[Official Report, 25/5/22; col. 856.]
I would like to hear today how this will be achieved. My concern is that this admirable political spin will not in fact be delivered by the Bill.
There are a couple of positives that I should mention. First, we heard at Second Reading that below-threshold contracts can be reserved for UK suppliers and small suppliers where it is good value for money, but unfortunately the thresholds are very low: £138,760 for goods and services and £5.336 million for central government construction. Moreover, at present, the Bill lacks thresholds to exempt small business as opposed to small contracts. It does something about small contracts but not about small business. I want to give SMEs preference in contracts more generally, so that they are in with a chance. SMEs are the lifeblood of our economy and, with more than 5 million of them before Covid, they were one of the reasons for our comparative economic success in the OECD. In Brussels, other member states used to be envious of our rate of small business formation. Things are much less rosy now, thus my various suggestions in this group to try to improve matters.
My second positive is Clause 63, which appears to introduce 30-day payment terms on a statutory basis. This will presumably improve current public sector practice. It is extended to new areas such as the supply chain of bidders and utilities. This may work, but I fear that the compliance arrangements could be very bureaucratic. Moreover, the one-off working capital hit could be reflected in tougher requirements on those very suppliers. In my experience, when new rules and practices and red tape are introduced, small suppliers that lack buying power can find their deals eroded in subtle ways. I also believe that 30 days is often too long a payment period for small suppliers, but it depends on the commodity. Fresh food and things that are consumed instantly should be paid for more quickly, whether they are supplied to prisons or to the House of Lords, which I assume is covered by these new provisions.
The Minister mentioned a third positive, which is the early publication of contract details which can be helpful to small businesses and new entrants. He may be able to point me to other areas where life will improve for SMEs as a result of the Bill, and I hope that he takes the opportunity to do so.
My feeling is that there is not enough, certainly not enough to fuel the supply side revolution that we need to get Britain growing again, and I call on the Government to do more. I will, of course, be very happy to look at other options. I beg to move.