My Lords, I will speak to Amendment 141, which is in my name and those of the noble Lords, Lord Alton and Lord Coaker, and of the noble Baroness, Lady Smith, demonstrating cross-party support for it. I add my support to the other amendments in this group.
I also underline my gratitude to the Government and my noble friend the Minister for seriously engaging with the amendment over the summer. I know that we share a desire to mitigate the two key risk areas in public procurement that the amendment covers: first, the possible UK dependency on authoritarian states; and, secondly, the risk of modern slavery in government supply chains. I covered these areas in Committee, so I will keep my comments brief and seek to address any concerns that my noble friend might have raised.
To recap, proposed new subsection (1) would place a burden on the Secretary of State to create regulations that reduce public bodies’ dependency on authoritarian states. As we know, there is no agreed definition of what constitutes an “authoritarian state” in UK law or regulation. Therefore, proposed new subsection (2) would adopt the categorisation contained in the integrated review of security, defence, development and foreign policy, allowing the legislation to adapt to contemporary geopolitical developments in line with the latest iteration of the review. The countries the amendment would currently apply to as “threats” are Iran, Russia and North Korea, and, as a “systemic competitor”, China. As we have heard, this perspective on China was reiterated by the Prime Minister only this week.
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Proposed new subsection (3) sets out what must be included in the regulations. Questions raised by my noble friend the Minister in Committee and now
included concern about whether this amendment would place an obligation on the Government not to procure from these nations. The answer is no. The amendment enables the Government first to identify where we are dependent on authoritarian regimes for key supplies; then to define acceptable levels of dependency across industries; and then to publish an annual review of dependency. It does not prohibit procurement from these nations.
The real question we should be asking is why, given all that we have experienced with Covid and Ukraine, we would not want to do this. With this information, the Government are then in a position to manage down risk to the British people in key sectors. Had Germany undertaken such an approach to its dependencies, it would never have allowed itself to develop such a dependency on Russia for energy. The entire amendment has been framed to give the Government regulation-making powers, meaning that they have the ability to ensure that there are no unintended consequences and to draft the regulations in line with the wider strategy for public procurement.
Another question raised by my noble friend the Minister was whether this would impact on our procurement flexibility. There is no evidence for this; rather there is clear international precedent for this proposed new clause. For example, the EU Commission staff working document Strategic Dependencies and Capacities provides mapping of EU dependencies in the most sensitive ecosystems and provides a range of policies that could be taken to address these issues. The United States also publishes a similar regular review.
The risks of economic dependency, however, are not the only relevant matters here. The second part of the amendment proposes new subsections (4) and (5), which address a separate issue: modern slavery in the supply chains of publicly procured goods. The presence of modern slavery in supply chains is clearly unacceptable. This has rightly been acknowledged by the Department of Health and Social Care, which has already taken steps in the Health and Care Act to eradicate from its supply chains goods “tainted”—a Department of Health word—by slavery.
Proposed new subsection (4) in this amendment adopts substantially the same language as Section 81 of the Health and Care Act, passed earlier this year. The requirement to bring regulations to, in the words of the Department of Health and Social Care, eradicate
“from all public contracts goods or services that are tainted by slavery”
now stands as part of that Act.
As things stand, when the Health and Care Act regulations are drawn up and passed, those procuring health equipment will have to apply different human rights standards from those procuring goods and services on behalf of other government departments. The main intention of this amendment is to align procurement standards across government so that the UK Government speak with one voice. It seems odd for us to be unwilling to procure goods from Xinjiang for the NHS but comfortable doing so for the Home Office. This is about correcting a loophole in the law and seems a matter of simple common sense.
From my conversation with the Minister, it would seem that Department of Health officials are already in conversation with Cabinet Office officials about how to draft these regulations to implement them for the Department of Health. This enables those same officials to work to draft regulations that would work for the whole of government.
I know the Minister has some concerns about aspects of this amendment and its potential chilling effect on business, but where this has been operationalised in, say, the US, it has not had such an impact. I will address the Minister’s potential concerns, the thrust of which, if I understand them correctly, is that the amendment could increase the compliance burden on small and medium-sized businesses. We are not seeking to create extra burdens above and beyond what is necessary, but this amendment is about fine-tuning our existing system to bring it in line with best practice.
As I have stated, proposed new subsection (5)(a) to (c) focuses on ensuring that there is one consistent standard of regulation for modern slavery across government. Rationalising the standard so that the Department of Health and Social Care is not an outlier seems sound. The regulation-making powers lie in the hands of the Government to ensure that small businesses do not suffer.
Proposed new subsection (5)(d) requires businesses to know the sources of their products. Businesses that do not know the origins of the products they are selling, or their constituent parts, are unable to offer assurances about labour standards in their supply chain, but they also face major business barriers to guaranteeing supply and implementing product control and recall. This means that most businesses can map out their supply chain. Calling for transparency to ensure that we do not have modern slavery in supply chains is relatively uncontroversial.
Ultimately, the two risk areas of dependency and modern slavery cut to the heart of our character as a nation. We want to stand as a beacon for liberal democratic values around the world. To do this we need to ensure we retain the autonomy to act in line with our values by reducing our dependency on authoritarian states. We also need to ensure that we are living consistently within our values by ensuring that there is no modern slavery in our supply chains. The Department of Health and Social Care has shown the way. This amendment enables the rest of government to come into line.