Official Report 543KB pdf
Agenda item 2 is evidence taking on the Procurement Reform (Scotland) Bill. We will hear evidence from two panels of stakeholders. The first panel is composed of representatives from the third sector and from the Equality and Human Rights Commission. I welcome Tom Ballantine, chair, Stop Climate Chaos; John Downie, head of public affairs, Scottish Council for Voluntary Organisations; Chris Oswald, head of policy and communications, Equality and Human Rights Commission; and Martin Rhodes, director of the Scottish Fair Trade Forum.
I speak on behalf of my coalition. I was fairly extensively involved in a steering group that looked into the bill in its initial state. Documents and information from that consultation were sent out to my coalition. Within that big, wide coalition, which has limited resources, there were different levels of engagement.
I sit on the procurement reform advisory group, which is chaired by the Deputy First Minister and includes the Federation of Small Businesses, the Coalition of Care and Support Providers in Scotland and the Scottish Chambers of Commerce. Over the past year, that group has had quite intensive discussions around the table with officials. I might take issue with the word “consulted”; whether or not the Government consulted, I do not think that it listened, and that problem is inherent in the bill.
We will come on to that.
The experience of the Scottish Fair Trade Forum was very similar to that of Stop Climate Chaos. We were involved in the steering group and the wider consultation process.
Because the EHRC has a regulatory role as well as a policy and development role, we were not directly involved in the bill’s formulation. However, we responded to consultations and we worked on our guidance jointly with the Scottish Government procurement team as the bill was being developed. I think that we had some influence there.
Will the bill deliver the Government’s policy objectives of
I think back to when Alex Neil was the Cabinet Secretary for Infrastructure and Capital Investment. The vision that he articulated for the bill was about local job creation and helping to build resilient communities. We took a delegation from the sector to talk to him about the bill and everybody bought into that vision. At that point, we thought that the bill would make a real difference and would help us to direct more procurement spend into local communities.
I am sure that you will be able to talk about those.
We made our concerns known early in the consultation process, but I do not think that they have been entirely addressed by the bill that we have in front of us. Without definitions of environment and sustainability, it is difficult to see how the bill will work. It is crucial that the bill includes a definition of sustainable development and, specifically, the idea of living within environmental limits.
If one of the objectives is to promote local businesses and to buy locally, is that not a sustainable environmental policy?
It is, but section 9 talks about the duty only to “consider” economic, social and environmental benefits in procurement. That does not mean that they are going to happen. I may be wrong, but the concern is that if those benefits are just considered and there is no real understanding of what is meant, we will get delivery of primarily economic benefits without any acknowledgement of the social and environmental benefits.
Is what you seek not more likely to be contained in subsequent regulations and other subordinate legislation? By its very nature, the bill must be fairly high level because it covers such a wide range of procurement bodies.
That has been put to me before and I hope that, if the matter is not covered to my satisfaction in the bill, there will be better coverage further down the line. However, without the initial definition of what we mean by sustainable development it is difficult to see how regulation and guidance will flow naturally from that high level. I suggest that, at the top, we start with a clear definition of what we are trying to achieve and have some idea of the hierarchy within that. After that, yes, we can move to a strategy and guidance on how that is going to happen.
The forum’s perspective is similar to that which Tom Ballantine has just outlined. We recognise that guidance and regulations will set out the detail of how we will achieve more fair trade procurement through the public sector. However, the bill fails to offer us a statement of intent at the higher level. Our interest lies in how procurement in the public sector could be used to strengthen and bed in the commitment resulting from Scotland’s achievement of fair trade nation status earlier this year. A statement of intent that sets that out in the bill would give procurement officers greater confidence.
We are in a slightly different position with regard to equalities because since 2002 we have placed a series of requirements on public bodies in Scotland relating to race and disability, and subsequently gender. Procurement has always been defined as a public function for the purposes of equality legislation, and public bodies in Scotland are already required to pay due regard to equality in any procurement opportunity, irrespective of the size of the contract.
That is interesting.
On the point about definitions and guidance, the bill is very much an enabling bill and relies heavily on policy guidance. As I think was pointed out in earlier evidence, the general provisions are very light on specifics and the duties are ambiguous, which becomes part of the problem. There is current guidance, and we know that current procurement legislation, particularly in relation to social care, has not been followed, as Annie Gunner Logan has articulated at a number of committees.
I will move on to more specific aspects of the bill.
Scottish Water is the obvious example of a body that should perhaps be in the bill. The provision should apply across all public bodies—that is our view.
Does anyone else have a view on Scottish Water’s exclusion? Specifically, I wonder whether there is a climate implication in that regard.
I am thinking as you are speaking, and the exclusion certainly seems surprising. As you can imagine, as a wide coalition we do not always take a specific stance on specific authorities, so I am not in a position to say yes or no to anything. What I can say is that, in principle, we would want the provisions to apply as widely as possible. I do not think that I am authorised to go any further than that.
If anything comes to mind, you can always let us know.
We have not taken a view on those issues. To pick up on those and previous questions, we would welcome as wide and far-reaching a provision as possible on the authorities that are covered and on the levels, although we recognise that there are constraints on what can be done and that there are constraints on procurement other than those that relate to our interests. The responsibility and duty relating to fair trade that we think that public sector bodies should have should be as wide as possible.
As we said in our submission, we support the inclusion of national thresholds, but the differentiation that the thresholds will create in the bill is a bit unclear. For example, it is not clear how the threshold of £50,000 will lead to a differential between contracts that are above and below that figure. If we are to have a threshold, as other European countries have, we must be clear that the regime below the threshold is slightly lighter.
I noticed that your written submission makes a comparison with Greece, which I am not sure is entirely the right place to go. Is it appropriate for us to look at what is done in other European countries and try to match their thresholds?
We should do that. A lot of research has been done. We have on file somewhere a report that concerns European comparators, so we can see how processes work in those countries. We can even look at how other countries design and write their contracts in a perfectly legal way to consider the social impact, which is an approach that is used widely across Europe. A good recent example is that United Kingdom companies lost a contract to build trains down in Derby whereas, when a similar contract came up in Germany, it was written in a way that meant that only a German company could win it.
Alex Johnstone asked about what we can learn from Europe. From our perspective, there is lots to learn from different examples and approaches to fair trade in procurement across Europe. Valuable lessons could be learned.
I am keen to get views on the thresholds from other witnesses, too.
Under the Equality Act 2010, economic thresholds do not apply—the argument is about proportionality, so the issue is the impact on equality. That has a resonance with what others have said. One of our concerns about the introduction of thresholds is that they could cause confusion between the 2010 act and the procurement regime that is intended to be introduced.
Why are other countries seen as managing to stay within the EU rules while delivering contracts to national companies within their own jurisdictions?
That is partly to do with the fact that they look at the cost benefit analysis and the risk factors. From my own experience, I know that the UK and Scottish civil services try to build all the risk out of all our guidance and legislation and everything else that we do. However, there will be risk.
In your experience—you might not be able to answer this question; we can probably find the answer elsewhere—are there lots of legal challenges at the EU level?
Different countries face legal challenges, perhaps because they take more of a risk. For example, France is seen as somewhere that takes more of a risk. However, relatively speaking, I do not think that the numbers are that high; I think that we worry too much about the issue.
We now move on to part 2 of the bill, which is on general duties and procurement strategies. Gordon MacDonald has some questions on that.
In your opening remarks you touched on your views on the sustainable procurement duty, and someone commented that we will have only to “consider” the sustainable procurement duty and, as I understand it, have clearer statements and policy guidance. In its written evidence, the Equality and Human Rights Commission has stated that it has found no examples of the 2004 public sector directive on equality in public sector contracts being used. How can we beef up the legislation to ensure that, unlike the public sector directive, the sustainable procurement duty is not ignored?
I do not necessarily think that it is about legislation. As has been said, it is about procurement officers being confident that they will not be challenged. At the moment, there is more a sense that they will be challenged than there is evidence to show that innumerable challenges are being made. As a result, reluctance and conservatism have come in.
For us, the bill is about giving people confidence. The detailed guidance will deal with the process, but confidence itself is very important. Our experience of talking to and working with local authorities, universities, schools and colleges suggests that if the people who are at a high level in, for example, a local authority or a university administration and who have the political leadership to tell people what they want them to do produce a clear and public policy statement, procurement officers will sit down and look at the guidance and gain the confidence to do what they need to do. I am aware that a lot of the time it sounds as though we are criticising overly cautious procurement officers, but it is the fault not of the procurement officers themselves but of the organisations in which they work that have not set such frameworks. The bill offers the opportunity to make a clear statement of intent on social duties and to give those at the front line of procurement the confidence to deliver.
I have already alluded to the idea that we need a clearer definition of “sustainable”. However, an easier way into this would be similar to the recycled goods provision in section 31, in which people will be required to buy a certain number of recycled goods or things that come from recycling. Putting a similar duty on suppliers and procurers with regard to goods that are procured and the emissions that are attributable to them would achieve a similar end and would beef up the importance of meeting the environmental target.
If the guidance is framed correctly and people are given confidence, will the bill help third sector organisations to bid for public contracts more easily?
The bill has that potential, if we get it right. Part of our submission is about the need to separate buying of things from buying of services—in particular, services that are supplied by the third sector. That is one of the big issues. In our view, tables, chairs and glasses cannot be bought in the same way that people services—social care services, mental health services and alcohol and harm-reduction services, for example—are bought. That needs to be done in a very different way. The bill could help as you suggest if, through the committee’s report, we address some of its inadequacies and think about the direction in which we want to go.
Can you be specific about the reworking that is required?
I gave the specific example that we need to separate the buying of tables, chairs and computers from the procurement of people services. That is fundamental and needs to be in the bill, because otherwise, the same procurement process will be used for those two different things.
I understand where you are coming from—you are looking for a culture change in procurement processes. The bill provides an opportunity to set out the mission, but I am looking to you to spell out precisely how we can change the culture. Does that go beyond legislation?
We have recently had a number of interesting discussions. The Cabinet Secretary for Finance, Employment and Sustainable Growth asked us to do a study on long-term funding for the third sector. In my view, it is not possible to talk about long-term funding for the sector without considering procurement.
Fine. I understand that, but I am looking to you to tell us what instruments we need in order to achieve that without getting everyone together in a room and telling them what to do?
There is provision in the bill for training to be taken into account. From the evidence that we have gathered outwith our formal meetings, it is clear that there are well-trained procurers out there; the issue is how we spread that good practice further.
The committee probably knows that the Scottish Government had a contract called developing markets, which involved a consortium working to bring together third sector organisations and procurers in order to enhance procurers’ knowledge of the third sector and to deliver the kind of culture change that you are talking about. The Scottish Government has just awarded the second contract. Interestingly, it did not consider the bill or the changing environment around self-directed support, and there has been no evaluation of the first contract. We do not know of any outcomes that would show that the initiative has worked to change behaviour and culture. Frankly, we are just wasting money on the second contract, because we need to see what happens with the bill before we can do more.
Obviously, we have specific concerns about the need to make clear the intention, particularly around fair trade. The definition of “area” is important with regard to the sustainable procurement duty. Section 36(2) says:
We share the same concern, but in relation to emissions and how we account for emissions.
With regard to what Martin Rhodes said, we have had submissions about Scotland-based companies that import fairly traded products not getting a fair crack of the whip.
The principle behind fair trade is trade—we are not talking about some sort of charity. It is therefore potentially beneficial to all parts of the supply chain. It may well be that the primary focus is on farmers and producers in the developing world, but there are benefits to small and medium-sized enterprises in Scotland that trade with fair trade producers in the developing world. We are looking for that mutual benefit.
Obviously, there is also the question of sourcing food from local farmers as, I believe, Moray Council and North Ayrshire Council—or East Ayrshire Council—are good at doing. Would that be considered to be fair trade?
It would not come under our definition of “fair trade”, because our concern is with farmers in the developing world. However, we do a lot of work with local producers in Scotland, because many of the concerns that people have about products—health concerns, concerns about how something has been produced and so on—come into play when people are thinking about sourcing products locally or ethically from elsewhere. As I mentioned, some food items are not available to be sourced locally; we work closely with people to see whether food can be sourced locally, but that cannot always be achieved simply because of what is produced here.
You mentioned the East Ayrshire school meals programme, which I know a little bit about. It is a good example of a scheme that could play straight into a requirement in regulations to procure a certain amount of goods that meet specific emissions standards. Under that programme, they have 30 per cent organic, 50 per cent locally produced and 75 per cent unprocessed food, which seems to have been welcomed by the children, the community and everyone who is concerned with the venture. If we are talking about providing mechanisms to give procurers confidence, that is a prime example of a situation where such things could be encouraged and more could happen.
Mr Ingram made a point about the specifics around changing the culture. A number of city councils south of the border have been working closely with their supply chains. One issue that they have been trying to address has been to ensure that suppliers understand their objectives clearly—for example, if they want more sustainable transport, or fresher school meals, or to create employment in certain areas. That understanding among suppliers has helped them.
The East Ayrshire scheme is a good example of creating a hierarchy in procurement. There was a points system; 50 per cent of the points were for cost, 15 per cent were for the environment, and so on. The local authority essentially created a hierarchy and gave the procurers confidence to use it, and they got the result.
I am mindful that a lot of the points that Mary Fee wanted to cover, such as those concerning ECHR and fair trade, have been covered, but I shall let her in if there is anything else that she wants to ask.
The fair trade issue has been covered. Do the witnesses see any conflict between the sustainable procurement duty and the general duties to treat suppliers without discrimination and to act in a transparent and proportionate manner? How can contracting authorities resolve that issue?
When it comes to dealing with things in a proportionate manner and transparently, it all comes back to the initial criteria for procurement. If the correct definition is set at the beginning, there would not be any contradiction between a sustainable goal and other goals.
So it is just about setting the standard or the goal in the right place.
Yes, I would say so.
I agree.
Do you welcome the proposals on procurement strategies and annual reports? What is your view on strategies and reports?
I absolutely welcome the requirement for reports and the like, but they will be valuable only if there are clear guidelines on what is expected to be in reports—specifically, that there must be some indication as to the value to be put on environmental and social as well as economic outcomes.
Similarly, I very much welcome the idea. To pick up on the point that the guidelines should make clear what is required in those reports, if that is clear, some sort of national report that brings all the information together could be produced. We would like a national approach that looks at what is being achieved through procurement, so that that can be measured and monitored year on year and we can see where improvements have been made.
That issue has certainly come up before. Most of our previous witnesses have agreed that a report is a good idea, but they wonder who will monitor the report and what action will come out of it. That is really important.
I agree with that. Fundamentally, local authorities and other public bodies need to articulate what they are trying to achieve. If that can be done, and if it is the driver for the report, a whole range of outcomes can be measured. As I said, for us, the issue is less about the efficiency of the system and more about whether procurement creates local jobs, reduces health inequalities and addresses a range of other issues. The measures will be different for different public bodies. For example, some local authorities are further ahead than others on the transition to a low-carbon economy. How do we measure such issues? What we measure will be the key. It needs to be valuable and should allow us to try to redirect the spend in future. There will have to be someone to monitor the situation, perhaps not independently, but in an objective manner.
I suppose that such a report, if it is monitored, can be used to build the strategy and make it stronger.
Yes.
As well as having a report, a lot will depend on the implications if bodies do not meet their responsibilities. We already have duties on sustainability under the Climate Change (Scotland) Act 2009. I have been reading the Transform Scotland report “Doing their Duty? Is the Scottish public sector helping deliver sustainable transport?” The report says that very few local authorities have plans to reduce their emissions from transport and that large numbers of people are still flying rather than taking the train down to London. If those kinds of things are included in the reporting system, the question will be what happens if bodies do not meet their responsibilities.
There are already duties to report on the mainstreaming duty on equality, so I would not particularly want to encourage further layers of reporting. Therefore, where we can integrate things, that would be helpful. An issue at the edges that concerns me is that we potentially have two different regimes in place—one to deal with equality, which is about protected groups of men and women, such as ethnic minorities and disabled people, and one that is about social inequality, which predominantly means deprivation. Under the bill, there is the potential to have thresholds in play relating to social inequality but not thresholds relating to protected groups.
Do you think that that would be down to guidance under the bill?
Guidance helps but, in my experience of working in race and disability and now across all the equality strands, guidance in itself has not changed culture. We see that, by creating or facilitating networks of positive procurement practice, we encourage and drive up standards. It is about officers being confident in what they are doing. European legislation is often seen as a massive inhibitor, but unjustly so, because the inhibitions and prohibitions are not there. There is a cultural sense in procurement that there are things that you can and cannot do, which we want to get past.
Does it come back to the training that is given to procurement officers, and their awareness of what they can do without breaching European regulations? Is it a training issue?
Training certainly helps, although leadership and having positive role models in this area—seeing somebody else take a risk, be successful and have good outcomes—also helps enormously. We come back to the issue of reporting. Reporting the positive outcomes that you have had encourages other people around you to change their practices.
Just as a gloss on that, on the issue of positive outcomes, when we talk about environmental outcomes, it is particularly important that one looks beyond just the economic and sees the other positive benefits. If procurers were able to take into account the wider benefits, such as in health, it would make it much easier for them to make better procurement decisions.
We move on to specific duties.
Before I ask about specific duties, I want to pin the witnesses down on a couple of points that have come up in their evidence this morning.
You are probably aware of a number of points that we have raised on that front. Essentially, when we are talking about sustainability and therefore the duties that flow through the bill, we have given five guiding principles of sustainable development, which are already agreed by the Scottish Government. The first of those is living within environmental limits. The first point is to include in the bill a proper definition of what you mean by sustainable.
How would procurement officers evaluate the environmental costs and benefits when making those procurement decisions?
You would ask the suppliers to provide an annual assessment of carbon emissions attributable to their business and to provide information on the carbon emissions attributable to the whole life of goods and services supplied. You could require the procurer to procure a certain quantity of goods that meet those standards, worked out on the basis of the information that you have been given.
That is helpful.
We would probably have that threshold. The bill talks about a threshold but, as I said earlier, there is not a clear differentiation between the different procurement processes either side of that line. The bill needs to be clearer on that. Whatever threshold is set, whether it is £50,000 or £90,000, the bill should be clearer about how procurement will operate below it. At the moment, there does not seem to be any difference between procuring under the threshold and procuring over it.
I am sure that we will return to that issue. I ask each of the witnesses to say quickly whether they have a view on the requirement to place contracts above a certain threshold on the public contracts Scotland website.
I agree with that. If all the information is made accessible to as many people as possible, that will give everyone the opportunity to be involved.
The more transparency and openness we have in the process, the better. If the requirement is a way of achieving that, I agree with it.
I agree.
In my organisation, every procurement opportunity, irrespective of its size, is advertised openly.
That is helpful. I move on to community benefit requirements. Are you generally supportive of those and the level of the contracts to which they apply? Do you have any thoughts on how the bill’s provisions on that could be strengthened?
In thinking about the level, it is important to consider what a community benefit clause is. Technically, a community benefit clause can be built into any size of contract as long as it is proportionate. For example, if a contract is worth £25,000, the community benefit might be £500, and that sum could be donated to a local playgroup. There are different ways of doing it. We tend to look at large contracts and wonder how we can bring in wider community benefits, but we need to rethink what we mean by community benefit and consider proportionality across all types of contract.
As you have probably gathered, I am concerned about the use of thresholds. We should look at the way in which the 2010 act operates. First, you consider the extent to which a procurement opportunity is relevant to equality or—in John Downie’s case—to community benefits. If you feel that it is, you go forward and set award criteria, and monitor the performance conditions as the process moves forward.
That is helpful. We are already seeing a tension emerging in the debate.
I do not think that there is a tension. Chris Oswald was talking about the need to decide what the right outcomes are. Part of the problem at present concerns the different thresholds. I chair a social enterprise, and I will give you a good example. We were talking to three different local authorities in one big geographical area. One was not interested in what we were doing; one commissioned the service—it was worth £25,000, which was below that authority’s threshold; and the other local authority decided to put it out to tender. It was exactly the same service, and we were left wondering why one authority was bothering to tender it out at that level while another was straightforwardly commissioning it because it felt that the offer delivered a good service, and it had seen the track record and had seen that the service had worked locally.
The bill gives the Government the power to instruct contracting authorities to have due regard to workforce issues such as the inappropriate use of zero-hours contracts and the unacceptable practice of blacklisting. Do you have any views on that?
We are totally opposed to blacklisting—we are one of the organisations from across civil society that signed up to the 10 asks, along with trade unions and others.
I was asking specifically about the inappropriate use of such contracts.
We are against their inappropriate use, but we are in favour of their appropriate use.
Is the bill ambitious enough in dealing with workforce-related issues, specifically with regard to the living wage?
I do not think that it is. We can and should introduce the living wage through the bill.
Under equality legislation, account can be taken of previous findings of discrimination in procurement against an organisation but, given that there is not a huge number of discrimination claims coming through, that only deals with the negative consequences. I agree with John Downie that there are opportunities here—certainly through the award criteria—to encourage organisations to adopt policies and procedures that would be beneficial, including flexible working and living wages. Although I doubt whether those could be enforced in the sense of one of those matters being the one thing that tips in favour of one organisation’s bid, procurement can play a positive role, and developing flexible working and diversity of the workforce are just two examples.
The Government has said repeatedly that it would not put a requirement for the living wage in the bill for legal reasons and that it would use guidance to encourage employers to pay the living wage. Will that be enough to lead to the sea change in pay and conditions that we hope to achieve?
No.
Okay—thanks.
It is good to have more communication between commissioners, tenderers and suppliers. We need to see more of that not only at an earlier stage before contracts are agreed, but after that. In my example from south of the border, I mentioned that people understand what the objectives are of that public body, which will then help them to bid for a contract. When a bidder loses out, they should be told why the bid was not good enough and in what matters they failed. Increased communication and relationship building will help, remove complaints and allow people to learn so that they can be better prepared the next time around.
In general, we would be supportive of anything that makes the process as transparent as possible. A big driver for positive social change is when people can see the processes and that those are more transparent at every level. That might be in the relationship and discussions between those who are issuing the tenders and those who are bidding for them. If people see that including social criteria in their tender has a positive effect, that can be a driver to make real improvement in what we get out of public procurement.
I want to wrap things up with a couple of specific questions on certain sections of the bill. What are your views on section 31? Do you support the proposals on the procurement of recycled and recyclable products?
Yes.
I have already welcomed that particular section. My only other comment is that it could be extended into other areas.
On that point, do you think that a similar amendment could be made to section 10, on supported businesses? Under section 31, the Government will set out in regulations that a specific proportion of recyclable products can be procured and I wonder whether it would be appropriate in section 10 for a specific proportion of contracts to be awarded to supported businesses.
I have always tended to be in two minds on that question. It might sound perfectly reasonable, but you would have to ensure that that pool of supported businesses met quality standards and other criteria and could deliver what you wanted. Social enterprises have been mentioned in this respect; as a chair of a social enterprise, I can tell you that there are different types of social enterprise, some of which are community based and others that are larger than that.
There is a problem with the definition of supported businesses as it stands, because a number of organisations that might not consider themselves to be providing supported employment could fit into it. In supporting the Sayce review, which essentially moved away from supported businesses as a model for employing disabled people, the commission wants disabled people to be far more integrated into the workplace.
With regard to disabled people, the SCVO runs community jobs Scotland, a consortium of more than 500 organisations, and at the moment we are looking at how we help young people with long-term conditions get jobs, as well as being very focused on disabled people. Those jobs will be real jobs in regular—or should I say mainstream—third sector organisations. The issue—procurement can still be used to do this—is how you support organisations that are taking on people who are disabled or who have long-term conditions. It can be done; with the right support, public and private sector organisations are more than willing to take people on. Such an approach will also take us away from the prospect of setting up some supported businesses to fail.
As you know, the bill provides remedies for suppliers. Is it necessary for the remedies regime for the new sub-EU procurement threshold to be similar to that for the above-threshold regime? Are those provisions appropriate?
Does anyone wish to respond?
To be honest, we do not have a view on that.
Remedies certainly need to be in place but I will have to think about that particular issue and come back to the committee on it.
It is important to have remedies. However, with regard to the bill’s provisions on actionable duties and non-compliance with section 8, I am concerned, again, about how we are talking about sustainability and sustainable procurement. If people are required only to consider economic, social and environmental aspects, it is difficult to see how that will flow into things being actionable, remedies and so on, unless there is some clarity on how those three aspects relate to one another
As members have no further questions and our witnesses have no final comments to make, I thank the panel for what has been another useful and thought-provoking session that has provided us with a lot of questions to ask the cabinet secretary when she comes before us. If later on you feel that you have forgotten anything—I know that John Downie is going to come back to us on a particular issue—please provide it in writing to the clerks.
Our second panel on the Procurement (Scotland) Bill includes representatives from trade unions, including those that submitted public petition PE1481, on blacklisting. I welcome Stephen Boyd, assistant secretary, Scottish Trades Union Congress; Mike Emmott—I hope that I have got your name right—employee relations adviser, Chartered Institute of Personnel and Development; Pat Rafferty, PE1481 representative, Unite; and Dave Watson, Scottish organiser, Unison Scotland.
We were consulted in the formal sense and we made submissions at every stage of the process. We were also involved in a series of discussions with officials and others in relation to the bill. We have worked on procurement for many years, and one of the advantages has been the degree of stability over the years in the officials who have dealt with procurement, which is something that you do not always find in Government departments. They always go out of their way to try to address issues, even though they are very pushed for time.
I endorse Dave Watson’s comments. The STUC has a long-standing and constructive working relationship with officials in the procurement directorate.
Will the bill deliver the Government’s policy objectives of
In broad terms, the bill is fine, but generally it is too timid. It reflects a risk-averse approach to procurement. It focuses essentially on housekeeping—on tidying up systems—rather than on the wider benefits that we could get from the £9 billion to £11 billion of procurement. That is why we have focused on issues such as the living wage, tax dodging and employment standards. Using procurement to address those issues is one way that the devolved legislature can tackle those issues. That is why we are part of the 10 asks coalition, which has been referred to several times already.
I think that we will cover the specifics that you mentioned later.
The CIPD is a professional body; we are not a trade union as such, but you could say that we represent the human resources community in all its manifestations from HR managers to academics, students, consultants and so on.
To supplement Dave Watson’s comments, the STUC found the bill slightly disappointing when measured against the early aspirations for what was then described as a sustainable procurement bill. About 18 months or two years ago we enjoyed discussions with ministers about the bill. At that point, we were talking about issues such as economic impact and ministers seemed quite confident then that they would be able to do something really new, different and challenging. We were much more circumspect about what might be achieved but, nevertheless, the aspirations were set very high and I do not think that the bill really delivers on any of them.
As I mentioned to the first panel, the bill covers such a wide range of organisations that it needs to be quite high level. Could the points that you have raised be addressed through subsequent legislation and regulations?
There is certainly scope for that but we have concerns about specific issues, such as the living wage, which is not mentioned in the bill or in any of the supporting documents. It seems to have fallen off the agenda and we are concerned about that.
As you mentioned earlier, convener, I was involved with the Public Petitions Committee in relation to the petition on blacklisting. Mike Emmott touched on the topic of blacklisting and we would certainly like to expand on blacklisting and how we address it within the bill.
We will certainly go into more detail on that later on.
Thanks, convener. Does the bill apply to the right set of contracting authorities?
From our perspective, when I read through the bill the first question that screamed out at me was, “Where’s Scottish Water?”
Do you support the introduction of the new regime for below-EU-threshold contracts? What are your views on the thresholds that the bill introduces?
Is that for Dave Watson again?
Dave Watson is our lead person.
As members know, there is an enormous variety of thresholds across Europe. One advantage of having a higher threshold is that it makes bidding simpler, because simpler processes can be used. It might also mean that we can have wider quality considerations that are not as constrained by European rules, which might happen if thresholds were not set at the right level. Proportionality, which is a clear concept in European law, would apply.
You have talked a lot about balance. How will the new thresholds affect contracting authorities and bidders for contracts? Does the bill’s structure create a fair position for contracting authorities and potential bidders or does it give one or the other an advantage?
I do not think that there is an advantage. We represent most of the staff who do the procurement job in public bodies. Balance is an issue at the moment, and judgments must be made. Simplicity is fine, but it has a trade-off—do people get the full access that they require? There is no easy solution, but the approach of pitching different types of contract in different ways is probably right.
Has the bill avoided the pitfall of making the procurement process simpler for those who are implementing it by making it harder for those who are bidding?
I was speaking at a conference of procurement professionals the other day, and that was not their view. To be honest, I am probably not some of our members’ most popular trade union official, given that we keep adding to the things that should be done through procurement. Most procurement officials would say that their job used to be about sorting out technicalities and getting a cheap price, and now they have all those other things to do. In fairness, that would be the view of procurement professionals.
Do any other witnesses agree or disagree with Dave Watson?
I would not dare disagree with Dave Watson.
Absolutely.
We move on to part 2, on general duties and procurement strategies. Gordon MacDonald has some questions on that.
What are your views on the proposed sustainable procurement duty?
As—
Dave Watson definitely seems to be the lead witness.
As a participant in the Stop Climate Chaos coalition, I defer to Tom Ballantine’s earlier evidence, with which Unison Scotland largely agrees. He outlined the reasons for that duty and there is not much point in my repeating them. We largely go along with those views. It is part of the 10 asks, and we have given some specific views about that issue.
Do you see any conflict between the sustainable procurement duty and the general duties to treat suppliers without discrimination and to act in a transparent and proportionate manner? How might contracting authorities resolve such a conflict?
I do not want to tread into the area of the living wage, because I presume that you will ask us about that later. There are some specific issues around discrimination in connection with that and I will be happy to explain some of the legal issues as we see them.
Is it a case of ensuring that we have the right policy guidance in place?
That is absolutely right. First there is guidance, and then the individual procurement rules and policies of individual local authorities, because that is where our members in procurement put their focus.
Do you welcome the proposals on procurement strategies and annual reports, and how might they be used to hold contracting authorities to account?
I very much welcome them. There is value in them, as long as they do not become just a tick-box exercise. To be honest, it is up to us as civil society organisations and to yourselves as legislators to pull in people who just do the box ticking. It gives us the opportunity to get a better picture of how those things work in practice, enabling us to evaluate the impact of legislation and regulation.
Dave Watson said that, in his view, the legislation is too timid. On the previous panel of witnesses, we heard from the likes of John Downie, who indicated that he doubted whether behaviour would change on the back of the bill, and that what is required is a cultural and behavioural change so that procurement officers have the confidence to bring to bear consideration of local social impact and the like. What do we need to do to the bill to effect that change?
I am not quite as cynical as John Downie is on that issue. My view is that cultural change needs a number of stages, and legislation has an important effect. For example, with the legislation on violence at work, we argued that, as a result of the Parliament saying that assaulting people at work—in that case, it was emergency workers—was wrong, the training and guidance would start to be introduced. That got out among the public and things started to change. Another good example is drink-driving. The cultural attitude that, dare I say it, Mr Ingram, you and I might remember from many years ago has changed. It did not change overnight and just because legislation kicked in, but the legislation was a catalyst for a broader cultural change. I entirely accept that passing legislation does not in itself make cultural change, but it can be the start of a process that will in a number of years deliver useful change.
I agree with Dave Watson that pressures from outside can fly a flag and test what the rest of the community thinks—you pick up flak or you get support. Adam Ingram is absolutely right that culture change is needed. It is almost tautologous to say that we need culture change to change behaviour, because when we get the behaviour, we know that we have the culture. As Adam Ingram said, the question is how we do it.
In many ways, this is quite an old debate. Eurostat publishes figures on the proportion of procurement spend that is spent domestically. Obviously, there are no figures for Scotland as it is not a separate member state, but the United Kingdom is always right at the low end of the spectrum in that regard. We are told that that is because other countries do things differently, and there have been various reviews of that over the years. Back in 2004, I think, we had the massive Wood review, the purpose of which was to identify what other countries did differently. However, the review’s conclusions were very weak. It could not identify anything practically that other nations did differently—it was all about the whole culture of procurement.
When I read your submission, I thought that the Marrakech programme must have involved an exotic holiday for somebody. Could you explain that a little more?
There are other people in the room who could probably do that a lot better than I can. I think that the programme has been delivered mainly to central Government procurement officials, although I might be wrong about that. It is about trying to get the procurement community to look at the range of issues that can be included in the procurement process—the kind of issues that we are discussing today. I will not embarrass myself by trying to give you any more details, but I can perhaps commit to providing something on paper to the committee at a later stage.
Thank you. I will have to look it up myself.
The bill gives us an opportunity to enforce guidance that already exists—I am thinking of the guidance on the living wage and blacklisting, in particular. We welcome the Scottish Government’s recent guidance on blacklisting and how, through procurement, the public sector can deal with companies that have been involved in it.
Good morning, gentlemen.
I have spent what seems like half my life chasing details of that particular contract from the Scottish Information Commissioner and the courts. I have the proverbial scars from that case and from many others.
I wanted to get that out of the way at the start—thank you for that clarification. I look forward to the amendments to the bill in due course.
I am slightly concerned that there is a growing misconception that the bill stipulates that community benefit clauses must be included in such circumstances. I notice that the Scottish Parliament information centre briefing briefs to that effect. It is very important to get it on record that the bill contains only a “should”.
Is that the right level at which to set the threshold?
I do not have a compelling view on the level of the threshold, although it certainly seems high. I have seen no justification of why contracts of half that size should not contain community benefits. The threshold seems entirely arbitrary, and I have not seen a decent explanation of why a value of £4 million should be the starting point.
I agree with Stephen Boyd: I think that £4 million is too high. I understand why the threshold has been set at that level, although other thresholds were considered. Those are large contracts, but there are other large contracts for which we would want to lever in community benefits, particularly for the local community.
I would not disagree with my colleagues Stephen Boyd or Dave Watson on lowering the threshold. The threshold of £4 million seems to be quite high and would bar some organisations from participating.
Just for completeness, does Mr Emmott have any views on that?
I will pass on that.
It is clear that there is an opportunity in the bill and in any associated guidance that is issued to cover workforce-related issues, such as the inappropriate use of zero-hours contracts and the often illegal and unacceptable practice of blacklisting, as stipulations when awarding contracts. I would be interested to hear the views of witnesses; perhaps it would be appropriate to kick off with Mr Rafferty, given his interest in the subject.
Thank you—I touched on the issue of blacklisting earlier. Although we welcome the guidance from the Scottish Government, there is a clear opportunity in the procurement bill to enshrine the guidance and give it a legal impact and a strong footing so that local authorities and other public sector bodies can enforce the provisions and ensure that companies that blacklist are dealt with appropriately.
So, to be clear, you want to put the guidance on a statutory footing by including it in the bill.
There should be a provision in the bill that clearly addresses how we deal with companies that have used blacklisting through the procurement process.
What discussions have you had with the procurement officials at the Scottish Government on the issue? Have you suggested that to them?
We have. I have not been involved directly, as a sub-committee has been formed on the issue. Jackson Cullinane is on that sub-committee. There has been dialogue, which is on-going, about how we can frame that.
I have here the advice to which you referred. In paragraph 17, it states:
There will be an opportunity to discuss the matter in that forum, but it would be more powerful to have a section in the bill that strengthens the guidance that has already come from the Scottish Government.
Is it not covered under section 23, on the selection of tenderers, and under section 24, on the guidance on selection of tenderers?
I do not know verbatim what those sections say, but in discussions I have been told that the provisions are not strong enough and that there needs to be a specific section containing more detail on the guidance.
Mr Emmott, blacklisting has been looked at in terms of the tenderers. As a former HR professional and member of your institute, I believe that blacklisting is sloppy HR practice. What is your comment on that? How would your organisation approach the issue?
You have put your finger on an important element. I would not have said it myself, but sloppiness is probably at the heart of some of the real problems that have occurred.
Before you go on to that subject, is there a conflict between what is in the bill on tenderers and employment law, which is still a reserved issue at the moment?
There is a layer that you are looking to place around the law. As I said, I am not a procurement guy, but I suspect that that tension always occurs. However, if you accept a layer in relation to equal opportunities and diversity, I cannot see why you would suddenly decide that you cannot have anything other than the law in this area.
On blacklisting, I am a member of the group that Pat Rafferty mentioned. We welcomed the Scottish Government’s initiative and we took that forward in advance of the bill. In our view, the initiative does not go quite far enough, but that is probably our view on most things. We will review it, but it does send out the sort of behavioural messages that we sent out before. That is also important in relation to some of the wider workforce issues.
We have evidence coming from the Health and Sport Committee on that as well. Mr Emmott wants to come back in.
I want just to say that whistleblowing is probably a consensus answer to the question of how we can stop employers mistreating people who simply want to draw attention to bad practice. In the national health service, the issue has been under continuous review for a long time, and there is a recent report by the whistleblowing commission as well. Its main weakness is that it treats it as a legal issue rather than a cultural issue, but that is another point.
Just on the back of Mr Watson’s powerful contribution on the care sector, I note that you talked about the reluctance of care workers to come forward and report on abuse or lack of compliance with health and safety. We have a national health service whistleblowers helpline. Is that something that we should be thinking about for the care sector?
It is. Obviously, the NHS helpline does not affect the broader groups. There is a petition on local government whistleblowing in the Public Petitions Committee at the moment, and a separate issue has been raised in relation to the health service. We provided a submission on that last week, in which we highlighted the recent report of the whistleblowing commission, to which Mike Emmott referred. I think that it was Lord Leveson who chaired that, although he is probably more famous for other matters. That report sets out in considerable detail a lot of interesting procedures. We generally welcome that and think that it could be used in local government and the health service to strengthen whistleblowing provisions.
I am not sure that that is directly related to the procurement bill. I will not take any comments that are not directly related to the bill and are just on whistleblowing.
Okay. I will touch briefly on various points, particularly zero-hours contracts and the bogus self-employed. Those practices are widespread. For all the right reasons, Dave Watson raised the issue with regard to the care sector, but we see it in other sectors, too. For example, in the offshore sector we have bogus self-employed people who whistleblow. It is all fine and good that there is whistleblowing there, but getting people to step up to the plate and whistleblow is very hard indeed.
I have worked in the offshore industry. People think that it is good to be a consultant on a zero-hours contract, because they look at the top line, but they forget all the responsibilities that come with that. That is certainly not spelled out by the companies that employ consultants or folk on zero-hours contracts.
We have spoken about workforce issues but we have not really focused on the living wage. Are panel members content with what the Government has said about the living wage? Do they agree with the Government’s legal position that the living wage cannot be provided for in the bill and with its intention to use guidance to encourage employers to pay the living wage?
First, we should say that the Scottish Government has done a lot of very good things on the living wage. We in Scotland have the highest proportion of people on the living wage, particularly in the public sector. We welcome the commitment on accreditation because we think that that helps to drive good practice.
The living wage has got traction and has become popular because employers have chosen, not necessarily without encouragement, to pay a living wage because they think that it pays off for them, often in terms of reputation, and because they can afford it; otherwise they would not do it. There is an issue of affordability, and you have to be careful, especially bearing in mind the fact that, as Dave Watson said, there is a minimum wage, and there is a question in the longer term about how many separate floors you want to run under wages and what is the justification for them. However, it is worth keeping employers on side, as they have been so far, and the proponents of the living wage, the Living Wage Foundation, tend to see it as something to be done by people who can see the value rather than as something that is pushed down employers’ throats.
Dave Watson makes a good point about being careful what question you ask and how you ask it, because it can affect the response that you get. Trying to get the living wage beyond the public sector and into the private sector is key, because the other factor is the unlevel playing field that it can create within public services, with some public sector bodies trying to keep services in-house or tendering for services that will pay the living wage, while private sector employers paying the minimum wage can come in and undercut costs for other bodies, so that the services are outsourced and the quality of service deteriorates. All those arguments can be made. To create a level playing field and make it level for the whole tendering process including the public services, you need to broaden it and ensure that contracts stipulate that employers will pay the living wage.
I want to ask a couple of questions about climate change. Section 3 contains an amendment about the use of recycled and recyclable products, and I would be interested in the panel’s views on that. My other question is about climate change duties and how useful they are in helping to meet our climate change targets, and about their lack of mention in the bill.
I have two points to make in response to that. First, we think that the recycling provision is a good one. As Tom Ballantine said, it is a model that we could perhaps extend more widely to drive that type of good practice. Often, staff in procurements—whether core procurement staff or the wider group of staff involved in procurement—are screaming out for good guidance, good support and good ideas. Legislation, guidance and the professional networks all help to do that, and the recycling provisions are a good example of that.
I absolutely endorse Dave Watson’s comments. I will open out the discussion a wee bit. We come back to a word that he used at the start—timidity. Much more can be done through the procurement agenda to support the shift to a more sustainable economy. That veers into innovation territory.
I ask Adam Ingram to wash up, as they say.
Is the introduction of a remedies regime for sub-EU-threshold procurement necessary and are the provisions appropriate?
Astonishingly, I do not have a particular view on that. I know that that will gobsmack all my colleagues and the committee.
I take it that it is a difficult question.
There must be a remedies regime. I do not have a strong view on whether we have got the right balance in the scale.
My position is the same.
You have described areas in which you want the bill to be beefed up. Do you seek any other improvements?
I will highlight the issue of tax dodging. As members know, section 23(3)(b) refers to
I will take the opportunity to stress a couple of issues in our written submission that have not been spoken about. I listened with interest to the colleague in the previous panel who talked about supported workplaces and the contribution that his organisation made to the Sayce review. I emphasise that the Equality and Human Rights Commission was not speaking for the workforce in supported workplaces when it contributed to that review. Members of that workforce are, to put it mildly, extremely sceptical that they will be mainstreamed into workplaces throughout the economy on similar terms and conditions and supported in their employment in the way they are in their current workplaces. Anything that can be done through the bill—we have mentioned a couple of things in the written submission—to help support supported workplaces would be appreciated. At a minimum, we must start gathering decent information on public contracts that are going to supported workplaces. Despite the good work that is done in that area, they cannot provide information about that.
As no one has any further questions to ask or comments to make, I thank the panel for a most helpful session. We will certainly take on board all your comments.