Committee
Economy, Energy and Fair Work Committee 09 March 2021
09 Mar 2021 · S5 · Economy, Energy and Fair Work Committee
Item of business
Public Procurement Inquiry
Good morning. I start by saying how pleased I am to make my first appearance at this committee since adding procurement to my portfolio responsibilities. As Minister for Trade, Innovation and Public Finance, I welcome the opportunity to focus on how procurement is and can continue to be a key enabler of the Government’s wider priorities. Of great relevance to that is the committee’s focus today on the Procurement Reform (Scotland) Act 2014. We welcome the committee’s interest in that area and thank all the stakeholders for their input into the process so far. Over many years, we have taken significant steps to shape public procurement in Scotland, starting in 2006 with the publication of the McClelland report, which identified a number of critical success factors in relation to getting the best value public procurement in Scotland. In 2016, we published a report that reflected on the overall progress of the public procurement reform programme since 2006. That was also the year when most of the provisions of the 2014 act came into force. The 2014 act enshrined in law the principles of public procurement in Scotland, introduced the sustainable procurement duty, which uses procurement processes to increase social, economic and environmental wellbeing; made it easier for small businesses to access and compete for public sector contracts; and increased the transparency of the procurement activities of public bodies. Almost five years later, we are embarking on a process of reviewing the effectiveness of our policies. Last December, we published the findings of research that we commissioned into the impact and value of the sustainable procurement duty. We have recently undertaken a survey of suppliers to the public sector, asking them about their experiences of bidding for public contracts, and we are analysing the 1,500 responses that were received. We hope to publish the findings in the coming weeks, and we will soon publish the second annual Scottish ministers’ report on procurement activity in Scotland, which will provide an overview of public procurement activity in 2018-19. The report is informed by individual annual procurement reports that more than 100 public bodies are obliged to publish under the 2014 act. The sustainable procurement duty report found that the duty has led to a step change in procurement practice. There has been significant progress since the duty was introduced in Scotland, and we are ahead of many other countries in our approach to sustainable procurement practices. The report reveals evidence that the duty is contributing to the achievement of national outcomes and the Scottish Government’s overarching purpose. However, although significant progress has been made, it recognises that more remains to be done across all strands of the duty to take implementation to the next level. We are not complacent. It is through all those reports that we will better understand what has gone well and where there is more that we can do. In that vein, we very much welcome the committee’s work to scrutinise the 2014 act and the opportunity to give evidence today. We view this scrutiny as an important element of our review. The 2014 act is recognised in other parts of the United Kingdom as progressive and enabling. The Welsh Government has replicated many of its provisions in its social partnership legislation, and the UK Government has picked up much of what we have had as established legislation since 2016 in its current green paper on procurement reform. I welcome this opportunity to provide evidence to the committee on progress to date and to update you on our plans to do more to ensure that public money that is invested in contracts with suppliers impacts on Scotland’s economy and communities.
In the same item of business
The Convener
Con
Item 2 is an evidence session as part of our public procurement inquiry. I welcome Ivan McKee, Minister for Trade, Innovation and Public Finance. He is suppo...
The Minister for Trade, Innovation and Public Finance (Ivan McKee)
SNP
Good morning. I start by saying how pleased I am to make my first appearance at this committee since adding procurement to my portfolio responsibilities. As ...
The Convener
Con
Thank you. Richard Lyle will ask the first questions.
Richard Lyle (Uddingston and Bellshill) (SNP)
SNP
We all know that public procurement has a tremendous impact in stimulating the economy. How is the Scottish Government seeking to promote economic recovery f...
Ivan McKee
Procurement has a significant beneficial role to play, and it is important that we harness the power of that spend, which represents more than £12 billion ac...
Richard Lyle
SNP
Has the Scottish Government given any consideration to developing standardised measures of procurement outcomes to assist in measuring the impact of the sust...
Ivan McKee
If you look at our annual reports, you will see that a number of standard measures are in place in relation to the spend, the suppliers that benefit from tha...
Richard Lyle
SNP
Some small companies feel that they cannot access council tender lists. How can we help small companies, in particular, in that regard?
Ivan McKee
I am always keen to do that, and significant steps have been taken through Public Contracts Scotland, whose quick quotes process makes the overall process ea...
Richard Lyle
SNP
That is good to hear.
The Convener
Con
I have a few questions, minister. What is the Scottish Government doing in terms of the wider supply chain? I am thinking about fair work requirements and so...
Ivan McKee
That is a great question. Prompt payment is an example of an issue that is of concern. Clearly, although the Scottish Government has a good record in that re...
The Convener
Con
You are talking about prompt payment, but I was asking about fair work. What is being done to ensure that contractors that are not the primary supplier adher...
Ivan McKee
Of course, you must remember that, because we do not have control over employment law in Scotland, there is a limit to what we can do with regard to putting ...
The Convener
Con
What can the Scottish Government do through things such as procurement reports to provide us with knowledge about what is going on? We appreciate that there ...
Ivan McKee
You are right about that balance, and we need to get it correct because, at the end of the day, it is businesses that have to provide the data around whateve...
Colin Beattie (Midlothian North and Musselburgh) (SNP)
SNP
Since I was first elected, I have had a stream of complaints about the procurement process and how it disadvantages small companies and so forth. I will touc...
Ivan McKee
Inaudible.—SMEs, which are businesses with fewer than 250 employees, represent about 40 per cent of business turnover in Scotland but benefit from, in total,...
Colin Beattie
SNP
I noted the percentage that you quoted about the volume of procurement that goes to SMEs. The Federation of Small Businesses has said that, although the Publ...
Ivan McKee
Inaudible.
Colin Beattie
SNP
Minister, you are muted.
Ivan McKee
Can you hear me?
Colin Beattie
SNP
I can.
Ivan McKee
Those were percentages of value.
Colin Beattie
SNP
Percentages of value.
Ivan McKee
Yes.
Colin Beattie
SNP
There seems to be an extraordinary difference between the perceptions of the FSB and its members and those of the Government. Do you have any—
Ivan McKee
SMEs are a broad category, which includes everything up to businesses that employ 250 people. Typically, that can be broken down into medium-sized businesses...
Colin Beattie
SNP
What is the Scottish Government’s assessment of the remaining barriers that hold back SME participation? Do you have a concern about anything significant tha...
Ivan McKee
Work continues on understanding where the challenges are. The supplier development programme has been effective, because it engages with such businesses and ...