My Lords, this is an altogether weightier statutory instrument than the previous one we discussed, running to many pages and with lots of interesting new acronyms. The noble Lords, Lord Stevens and Lord Hunt, have set out effectively the case for why the changes are necessary, in a kind of Birmingham pincer movement as I stand here in the middle. I also have ringing in my ears the comments of the noble Baroness, Lady Merron, on the previous statutory instrument, when she talked about a particular instance where procurement went wrong. We need to have that in mind.
It is worth putting a marker down now on the potential impact. We are talking about many billions of pounds of expenditure; how many billions is an interesting question that we will come to in a minute. The potential benefits are hundreds of millions of pounds of savings, as the noble Lord, Lord Stevens, pointed out, but we must acknowledge that there is a potential downside risk, which could be millions in
fraud and legal fees. It is worth spending a moment as we debate the instrument to make sure that everything is being done to ensure that we get the upside but minimise the downside.
My first question is around the integrated care board members and conflicts of interest—something that was raised by the noble Lord, Lord Hunt—particularly where they are not in a competitive tender situation, where we are talking about direct awards and most suitable providers. Once that decision has been made, there are some valid questions around what that means. Candidly, we do not want to create 42 ICB VIP fast lanes where people can talk to the ICB and somehow get themselves out of the normal procurement process when they should not be out of it. Therefore, there are risks at that level; we must be conscious of that. Given the roles that ICB board members have, and since these are local entities, it is likely that an ICB board member will have relationships with people in the local community who deliver services that will be subject to the tender.
My next question is about the variability and the number. It is flagged in paragraph 4 of the impact assessment that the expenditure over a period was
“estimated to be between £75bn-£380bn”.
I am not great at maths but that is quite a significant variability. It talks about how the £75 billion concerned procurement processes that went through the EU process and were notified, while the long tail of the other £300-odd billion concerned other procurements that were not notified. However, we should be able to get better information than that. One of my requests for the Minister comes with a suggestion: there should be a machine-readable database somewhere where all health and care procurement can be analysed and studied. I know that the department intends to do that but, actually, the best way for us to understand that we are getting good value for money is this: if anyone, whether a researcher at one of our excellent universities such as the University of Birmingham or another interested party, wants to be able to look at NHS purchasing data and can analyse it, they should be able to do so.
This seems to me to be a reasonable request to make of government: that information about procurement—including the status and how the contract was awarded, whether it was competitive or elsewhere—is publicly available and analysed by any third party who chooses to do so. The Government would benefit from that, as would individual NHS procurers, as people will analyse those patterns of purchasing and perhaps suggest something that they had not thought of themselves where they may be able to make more savings.
The final area that I want to cover is one that the noble Lord, Lord Hunt, touched on: skills in procurement. I suspect that all of us who follow healthcare have seen the Health Service Journal article in October that talked about integrated care boards in the south-west of England paying £1.7 million in compensation for a procurement failure. Obviously, that is happening under the existing regime, but it is a strong warning sign that we need to heed what happens when we get this wrong. Again, the impact assessment helpfully talks about the
litigation process and the different costs that may be assigned to each area. I think that we tend to underestimate these things. If anything, once you get into a litigation process, the pressure to settle and resolve it means that money is often thrown at the problem. This could mean a significant cost to the NHS if we get it wrong. The fact that we have a new process means that new risk is being introduced. What is being done around training? That comes in two aspects. The first is general awareness raising, which applies to everyone. Certainly, I have had experience in business of working for an American company where you are subject to the Foreign Corrupt Practices Act, meaning that you go to prison if you try to bribe a member of a foreign legislature.
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We did not direct the training for that simply to the people who worked in public policy; every single person who worked for the company did a short training module that helped them understand the legal risks, not only to the company but to themselves, of breaking the rules. Sometimes you can break the rules with perfectly good intentions without doing anything deliberate. The same applies here: there should be some kind of generalised training available to people who are working in the health and care system so that, even if they are not involved in procurement, they understand—again, looking at the case in the Health Service Journal—that the casual conversation they have with their friend who happens to be a supplier could later turn out to be something that is material in a litigation process. That generalised awareness is important.
The second piece that the noble Lord, Lord Hunt, referred to is procurement professionals, including how we make sure that those whose job it is to spend large amounts of money every day are up to speed with the new systems. I do not think that we can overinvest there; the tendency is always to underinvest. Again, a generalised complaint I have heard is that managers in health and care feel that they are so pressurised in just getting on with the day job that training is a luxury they will do tomorrow, tomorrow, tomorrow. In this case, if we are introducing a new system from 1 January, the training needs to be happening now and not put off until tomorrow. I hope that the Minister has something to say on that.
I do think that this change should go ahead. I recognise that there are savings to be made—again, the noble Lord, Lord Stevens, has far more experience than I of why that should be the case; I am really pleased that he has brought it to this debate—but there does need to be transparency. The report shows us why the current state of play, where we cannot get our hands around NHS and care procurement today, may itself be inadequate. That should not be the case; the data should be collected and made available in a machine-readable way such that there is full transparency. It is absolutely critical that we get ahead of this question of training and ensure that these procurement processes are not just fair but are seen to be fair and are robust if they are challenged, which they will be. The suggestion from the noble Lord, Lord Hunt, of a list of measures that we might take would be a very good start for that.