My Lords, I support government Amendment 40. This is very worthwhile. I am also very sympathetic to Amendment 41, tabled by the noble Lord, Lord Wallace of Saltaire. The reality is that not-for-profits, social enterprises and mutuals, when they come to retender or bid for different contracts, because a number of mutuals we supported have grown, both by expanding into different areas for the same group of clients but also by expanding into different geographical areas for different public authorities—and this is very worthwhile—but they are subject to very much the same kinds of constraints that the conventional procurement we inherited in 2010 imposed on SMEs.
I take slight issue with the noble Lord, Lord Wallace. I do not actually believe that there is a conflict between this approach—working to remove barriers to SMEs,
social enterprises and so on participating in, bidding for and winning government and public sector contracts—and achieving better value and supporting the aims of the free market. When we went down the path, in the coalition Government, of setting an aspiration of 25% by value, at that stage, of public procurement going to SMEs, the immediate response from the conventional wisdom was, “Oh, that means you’re going to abandon best value; you’re going to have to effectively subsidise SMEs”. Precisely the reverse was the case. Opening up procurement got rid of some ridiculous requirements that were not necessary at all but were imposed by safety-first procurers: for example, that bidders should have to show three years’ audited accounts and that there should be turnover thresholds, performance bonds and requirements to show that they had in place the insurance to cover the contract value before they even bid.
The combination of all these things meant that many SMEs and start-ups and some of the most innovative, competitive and dynamic potential suppliers were simply not able to get into the marketplace at all. So there is no conflict between value for money and opening up to smaller businesses: the two objectives go absolutely hand in hand. So I strongly support the amendment the Minister has brought forward, but I urge her to look sympathetically at Amendment 41, because social enterprises, not-for-profits, mutuals and so on suffer from exactly the same disadvantages and obstacles as there were in old-fashioned procurement and it is important, I believe, that they should be included in the same bracket.