Hansard

I suspect that procurement as a topic for debate may not have set many members’ pulses racing, but I am encouraged to hear that the debate is tightly subscribed.

As the previous two speakers have said, public procurement in Scotland is extremely important. It is worth £9 billion annually, and half of that expenditure is made by our local authorities. How that significant financial resource is distributed, which businesses benefit from that expenditure and the conditions attached to the awarding of successful contracts are of great importance not only to the national and local economies but in ensuring that small and medium-sized and social enterprises are able to access public contracts and in the provision of social and environmental benefits.

The debate, which comes in advance of the forthcoming bill, gives members the opportunity to contribute their views on what the bill should contain. It also gives us the opportunity to discuss what can be improved. The cabinet secretary has spoken about improvements to procurement that have happened without legislation. Legislation is not necessary for all the improvements—indeed, some respondents to the Government’s pre-legislative consultation expressed the view that legislation is not necessary.

That view was also voiced by some participants in the David Hume Institute seminar on this topic on 29 January. They argued that what is required is a change in the attitudes and approach to public procurement rather than in the legislation that governs it. The arguments surrounding that viewpoint will doubtless form part of the evidence that the committee will take on the bill. I think that the discussion will centre on that sensitive balance on what may be done and what should be made a requirement.

The bill’s progress is slower than originally expected. I listened with interest to the cabinet secretary’s response to Patrick Harvie. I appreciate that the Government is awaiting the detail of the new EU directive in order to ensure compliance.

The cabinet secretary mentioned supported businesses. In that context, I highlight the concerns raised with members over article 17, which will replace article 19 in the EU directive. It is due to be discussed in plenary at the European Parliament this week, and it was the subject of an email from Councillor Paul Carey of Glasgow City Council, who has raised concerns that the protection offered to supported factories and businesses, such as Blindcraft, is being downgraded by the reduction of the threshold of disabled employees from 50 to 30 per cent and the extension of the definition to include disadvantaged people.

I started by commenting that members might not have been excited by the selection of this topic for debate but, judging by the number of briefings that we have received, many stakeholders recognise its importance.

Some stakeholders are disappointed by what appears to be a shift in emphasis in the proposed bill from sustainable procurement to simply procurement reform. They are concerned that that signals a move away from the social and environmental benefits that good procurement practice can achieve to a more technical reform of the system that is beneficial to business and, I hope, smaller businesses and social enterprises but which misses the more widespread and ethical benefits that a more encompassing bill could provide.

Many stakeholders, including the Federation of Small Businesses, the Scottish Catholic International Aid Fund and the Scottish Council for Voluntary Organisations, have reflected on the effect of the focus on achieving cost savings rather than on taking a more holistic view of the overall benefit of the spend to local communities and the maximisation of social benefit.

Jim and Margaret Cuthbert’s report “Using Our Buying Power to Benefit Scotland” illustrates how procurement practice can work against economic and social development when it results in Scottish companies, particularly smaller companies, being locked out of public sector contracts for a period of years. I appreciate that the Cuthberts’ report was published some time ago, but there is still a need to consider carefully some of the points that they made in their research.

I listened to the statistics that Gordon MacDonald and the cabinet secretary quoted about access for small and medium-sized enterprises, but I think that there is an issue with the definition of what constitutes an SME. Defining an SME as an enterprise employing fewer than 250 employees means that SMEs can be pretty big, as there are not many enterprises of that size in my constituency. The definition actually encompasses something like 90 per cent of Scottish businesses, so I am not sure that we have quite the success that has been claimed.

The Federation of Small Businesses report “Local Procurement—Making the most of small businesses” tells us that 70 per cent of SMEs across the UK do not even bid for public sector contracts. Small businesses are deterred not only by onerous time-consuming prequalification questionnaires—although I appreciate that the Government is looking at that issue—but by the relatively high cost of submitting a bid compared with the value of the contract, the aggregation of contracts and joint procuring that puts contracts beyond the reach of small businesses, and the long-term frameworks for major construction contracts.

Some of those deterrents could be removed without additional legislation. Both the reports that I have mentioned contain illustrations of how procurement in other EU countries is managed differently. The problems that are encountered by small businesses in Scotland and the rest of the UK are not due solely to EU directives, as is often suggested.

The procurement reform bill presents us with an opportunity to define what we expect to be delivered in return for the £9 billion of public sector procurement spend. That should be defined not only in terms of the goods and services that are purchased; such a level of spend should be a powerful lever to promote good practice across a whole range of behaviours. For example, we should expect those businesses that receive public money to pay their taxes. Companies that conceal their wealth in tax havens while exploiting some of the poorer countries in the world should not be awarded contracts for the tax-paying public in Scotland.

The public sector should pay its workers a living wage, but it should also persuade its contractors to do the same. We should not subsidise—