Chamber
Meeting of the Parliament 17 April 2013
17 Apr 2013 · S4 · Meeting of the Parliament
Item of business
Public Procurement Reform
I welcome the opportunity to debate the proposed procurement reform bill and the wider procurement agenda, which is—I am glad to say—at last being given the prominence that it deserves in Parliament.
As has been indicated, annual spending through public procurement stands at £9.2 billion, rising to £11 billion. How we spend that money through public contracts and how those contracts are shaped have a direct impact on the economy. Therefore a new bill, tied to a wider series of reforms, gives Parliament the chance to make a real difference. We have the chance to follow the lead of Labour-led South Lanarkshire Council and others in challenging the injustice of blacklisting. We have the chance to promote decent wages, sustainable growth and a living wage, and to make the procurement framework in this country more business friendly and socially responsible.
I will flesh out that last point. I agree with all those who replied to the Scottish Government’s consultation by saying that public procurement can be an economic lever and a driver of real change. I argue for a responsible pro-growth public procurement framework that supports employment, helps recovery and is fair for Scotland’s workers and small businesses. The Scottish Chambers of Commerce, in its response to the Government’s consultation, was clear that in a stagnant economy the importance of public sector contracts to Scottish businesses cannot be overestimated. That is why public procurement must be sensitive to the immediate needs of Scottish firms as well as to the wider drive to build a stronger, more responsible and sustainable economy.
This might not be entirely evident from the Government’s analysis of its consultation, but there is a consensus about what is wrong with public procurement that unites a range of respondents from left to right. The most significant contracts are bundled into orders that are so large that Scotland-based small and medium-sized enterprises cannot possibly tender for them and have to subcontract. Big firms can win big contracts, cream off the best bits and leave small businesses with the scraps. Our interpretation of EU rules is too narrow and our adherence to that interpretation is too strict. The public sector is being deskilled and hollowed out of specialists who actually understand complex contracts.
If the bill does not address those points comprehensively, it will have failed not only to match the Government’s rhetoric, but to meet the needs of the economy. By procuring better, we can support Scottish firms, but with major contracts in which a significant amount of public money has been invested, we should go further. The £11 billion that we spend through procurement each year is more than a simple transaction; it is public money that could and should deliver wider benefits to Scotland. The bill should therefore do more than require those who are in receipt of major Government contracts to publish training and apprenticeships plans and to consider what might be achieved through community benefit clauses.
The bill should set out clearly how firms that are in receipt of such contracts can bring jobs, training and apprenticeships into communities. That should be backed up by achievable targets and statutory requirements, with a clear system for monitoring progress against those requirements so that suppliers know that there will be consequences if they do not fulfil their community benefit clauses.
I want to deal with contracts in more detail because, although the Government can do more with the new bill, it can also do a lot within the existing rules. The public sector is committed to being a good customer that pays its invoices on time, although perhaps it could do better. Contractors also have responsibilities and the construction sector tells us that late payments can be crippling. The Government’s biggest contractors can expect payment within 28 days, but subcontractors can wait for up to 90 days for the money to work its way down to them. That is why I was pleased to hear the minister mention project bank accounts.
The Government should also consider whether awarding contracts annually is always best. Forward planning is critical to the viability of small businesses, training providers and the third sector, which have all kinds of costs for matters such as staffing, property leases and equipment. We need to take their difficulties into account.
The bill and the procurement reform agenda are not just about businesses in Scotland; they are about how we do business in Scotland. I hope that, with some listening and dialogue and with a bit more ambition, the Scottish Government can move us towards a more business friendly and responsible public procurement framework.
15:24
As has been indicated, annual spending through public procurement stands at £9.2 billion, rising to £11 billion. How we spend that money through public contracts and how those contracts are shaped have a direct impact on the economy. Therefore a new bill, tied to a wider series of reforms, gives Parliament the chance to make a real difference. We have the chance to follow the lead of Labour-led South Lanarkshire Council and others in challenging the injustice of blacklisting. We have the chance to promote decent wages, sustainable growth and a living wage, and to make the procurement framework in this country more business friendly and socially responsible.
I will flesh out that last point. I agree with all those who replied to the Scottish Government’s consultation by saying that public procurement can be an economic lever and a driver of real change. I argue for a responsible pro-growth public procurement framework that supports employment, helps recovery and is fair for Scotland’s workers and small businesses. The Scottish Chambers of Commerce, in its response to the Government’s consultation, was clear that in a stagnant economy the importance of public sector contracts to Scottish businesses cannot be overestimated. That is why public procurement must be sensitive to the immediate needs of Scottish firms as well as to the wider drive to build a stronger, more responsible and sustainable economy.
This might not be entirely evident from the Government’s analysis of its consultation, but there is a consensus about what is wrong with public procurement that unites a range of respondents from left to right. The most significant contracts are bundled into orders that are so large that Scotland-based small and medium-sized enterprises cannot possibly tender for them and have to subcontract. Big firms can win big contracts, cream off the best bits and leave small businesses with the scraps. Our interpretation of EU rules is too narrow and our adherence to that interpretation is too strict. The public sector is being deskilled and hollowed out of specialists who actually understand complex contracts.
If the bill does not address those points comprehensively, it will have failed not only to match the Government’s rhetoric, but to meet the needs of the economy. By procuring better, we can support Scottish firms, but with major contracts in which a significant amount of public money has been invested, we should go further. The £11 billion that we spend through procurement each year is more than a simple transaction; it is public money that could and should deliver wider benefits to Scotland. The bill should therefore do more than require those who are in receipt of major Government contracts to publish training and apprenticeships plans and to consider what might be achieved through community benefit clauses.
The bill should set out clearly how firms that are in receipt of such contracts can bring jobs, training and apprenticeships into communities. That should be backed up by achievable targets and statutory requirements, with a clear system for monitoring progress against those requirements so that suppliers know that there will be consequences if they do not fulfil their community benefit clauses.
I want to deal with contracts in more detail because, although the Government can do more with the new bill, it can also do a lot within the existing rules. The public sector is committed to being a good customer that pays its invoices on time, although perhaps it could do better. Contractors also have responsibilities and the construction sector tells us that late payments can be crippling. The Government’s biggest contractors can expect payment within 28 days, but subcontractors can wait for up to 90 days for the money to work its way down to them. That is why I was pleased to hear the minister mention project bank accounts.
The Government should also consider whether awarding contracts annually is always best. Forward planning is critical to the viability of small businesses, training providers and the third sector, which have all kinds of costs for matters such as staffing, property leases and equipment. We need to take their difficulties into account.
The bill and the procurement reform agenda are not just about businesses in Scotland; they are about how we do business in Scotland. I hope that, with some listening and dialogue and with a bit more ambition, the Scottish Government can move us towards a more business friendly and responsible public procurement framework.
15:24
In the same item of business
The Deputy Presiding Officer (John Scott)
Con
The next item of business is a debate on motion S4M-06153, in the name of Maureen Watt, on behalf of the Infrastructure and Capital Investment Committee, on ...
Gordon MacDonald (Edinburgh Pentlands) (SNP)
SNP
It is a pleasure to open this debate on public procurement on behalf of the Infrastructure and Capital Investment Committee. As members know, the Scottish Go...
John Mason (Glasgow Shettleston) (SNP)
SNP
We sometimes hear criticism of the EU, for a variety of reasons. Will the member confirm what I think that he just said, which is that the EU gives Scottish ...
Gordon MacDonald
SNP
I agree on that point. The EU-wide framework opens up opportunities for Scottish companies, because the scale of procurement by the public sector across the ...
The Deputy Presiding Officer
Con
We are extraordinarily tight for time today. I call on Nicola Sturgeon, who has up to 10 minutes.14:50
The Deputy First Minister and Cabinet Secretary for Infrastructure, Investment and Cities (Nicola Sturgeon)
SNP
As Gordon MacDonald has just said, Scottish public bodies spend more than £9 billion of taxpayers’ money every year, so it stands to reason that the decision...
Patrick Harvie (Glasgow) (Green)
Green
On a question of timing, does the minister intend to wait until the EU process of reform is further down the line before introducing a bill here, or does she...
Nicola Sturgeon
SNP
We hope to introduce the procurement reform bill before the summer recess. We require to give ourselves comfort that what we propose in that bill will be wit...
Elaine Murray (Dumfriesshire) (Lab)
Lab
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 subscri...
John Mason
SNP
Will Elaine Murray give way on that point?
Elaine Murray
Lab
Sorry, I have only 10 seconds.We should not subsidise low pay in other sectors. I know that my colleague Kezia Dugdale is considering taking forward John Par...
The Deputy Presiding Officer
Con
You must close, please.
Elaine Murray
Lab
Workers’ rights must be respected. The cabinet secretary also made some good points about the use of community benefit clauses.I look forward to the introduc...
Mary Scanlon (Highlands and Islands) (Con)
Con
The Conservatives, too, welcome today’s debate, which provides an opportunity to bring forward some ideas.The motion in the name of Maureen Watt states that ...
John Mason
SNP
Does Mary Scanlon accept that one reason why we have limited resources is that we have tied up funds in private finance initiative projects, which have ended...
Mary Scanlon
Con
I am not sure that that was a positive contribution, which I am hoping to make.More recently, we received the report “Improving community planning in Scotlan...
The Deputy Presiding Officer
Con
That is much appreciated. We move to the open debate.15:13
Chic Brodie (South Scotland) (SNP)
SNP
I am delighted to speak in the debate, and my speech is built on the foundations that were laid by the Christie commission report to which Mary Scanlon has j...
Kevin Stewart (Aberdeen Central) (SNP)
SNP
I agree that there should be encouragement, but currently, the European Union legislation and a test case—Dirk Rüffert v Land Niedersachsen—show that we cann...
Chic Brodie
SNP
Of course, I agree with the latter point. I will come to the former in a minute.On the living wage and public sector contracts, it is anathema to me that we ...
The Deputy Presiding Officer
Con
The member’s keeping to time is much appreciated.15:19
Margaret McCulloch (Central Scotland) (Lab)
Lab
I welcome the opportunity to debate the proposed procurement reform bill and the wider procurement agenda, which is—I am glad to say—at last being given the ...
Linda Fabiani (East Kilbride) (SNP)
SNP
I thank the Infrastructure and Capital Investment Committee for holding this debate. It is an excellent idea to ask—as the motion states—for“members’ views o...
The Deputy Presiding Officer (Elaine Smith)
Lab
Thank you. Before I call John Mason, I just want to say that the building work is not supposed to be taking place while Parliament is sitting, so we are havi...
John Mason (Glasgow Shettleston) (SNP)
SNP
Thank you for that reassurance, Presiding Officer.I welcome the fact that procurement is on the agenda. Although we all accept that there is definitely room ...
The Deputy Presiding Officer
Lab
We are very tight for time.15:37
Tavish Scott (Shetland Islands) (LD)
LD
I, too, declare an interest as an honorary fellow of RIAS. I very much agree with Linda Fabiani’s point that the Deputy First Minister’s bill should not be s...
Kevin Stewart (Aberdeen Central) (SNP)
SNP
I thank the Infrastructure and Capital Investment Committee for giving us this opportunity to debate this important issue today. For many, this issue is not ...
Anne McTaggart (Glasgow) (Lab)
Lab
In these tough economic circumstances, it is right that the Parliament takes time to scrutinise how Scotland uses its buying power to promote social and econ...
Nicola Sturgeon
SNP
In the interests of fairness, will the member acknowledge that it is not that we do not support legislation for a living wage but that EU legislation does no...