The next item of business is a debate on motion S4M-10005, in the name of Nicola Sturgeon, on the Procurement Reform (Scotland) Bill. I advise members that we are tight for time. Deputy First Minister, if you could speak to and move the motion in around eight minutes, I would be most grateful.
17:21
I begin the debate by thanking everyone who contributed to the bill’s development, including members of all parties and a range of stakeholders. Stakeholders with an interest in procurement from various perspectives have contributed hugely to our procurement reform agenda. I know that they will continue to do so and I am grateful to them. I also thank the Infrastructure and Capital Investment Committee, whose scrutiny led to a significant number of improvements. Finally, I thank my officials and bill team, who worked very hard on what has been, at times, a technical and complex area of law.
It is fair to say that as the bill progressed through the parliamentary process it stimulated passionate and lively discussion. That is a good thing. I want to focus on what I think is a remarkable degree of consensus about what our ambitions should be in relation to public procurement. I think that all members, across party divides, support the bill’s broad aims, which are to ensure that the £10 billion that the public sector in Scotland spends every year is spent wisely and fairly and that, wherever possible, we use that spending to generate additional benefits for our communities, our businesses and our citizens—and indeed for the wider world, as Patrick Harvie sought to highlight in amendments that he lodged.
The bill contains a strong statement of our intent that good procurement practice must involve thinking about the bigger picture for Scotland when a procurement exercise is planned. The new general duties in the bill will help to achieve that, and the greater transparency that will be created by the requirements on advertising, contract registers and published strategies will help us to understand how procurement is performing and what it is delivering or not delivering—we will be able to take action if the latter is the case. Amendment 38, in Jackie Baillie’s name, which was agreed to today, provides for national reports to Parliament, which will help to ensure that we can monitor performance and strive for ever greater results.
As we debate the bill it is important that we remember that procurement must continue to deliver value for the taxpayer. The Scottish model of procurement, as it is increasingly being recognised, has at its heart the need to strike the best balance between cost, quality and sustainability. Delivering savings, reducing waste and improving quality through innovation are all vital objectives for our public services and are at the heart of what professional procurement staff are employed to do. The bill needs to help staff to perform that vital role, not hinder them in doing so.
We also have to remember that the public bodies that we are asking to embrace the requirements in the bill already have a complex and demanding set of rules with which they must comply in the overarching European law on procurement. I know that it has not always been popular when I have used this explanation, but we have therefore had to work hard, in framing the bill, to keep the new rules as simple and as easy to understand as we can and to keep them compliant with EU law.
Some stakeholders think that the bill does not go far enough and an equal number think that it goes far too far. Perhaps I am just an eternal optimist, but I take that as a sign that we have struck a reasonable balance in the bill. I believe that we all share the ambition that public procurement in Scotland should be business friendly by standardising processes, streamlining bureaucracy and encouraging innovation. The business-friendly aspects of the bill are particularly important when it comes to small businesses, third sector organisations and supported businesses, and I want to ensure that the bill delivers real improvements in their ability to access public contracts.
I believe that we all want companies that bid for public contracts to conduct their business in an ethical manner. I certainly want it to be the case that only businesses that comply with their obligations in law are successful in winning public contracts. In providing the power to make regulations and issue guidance on the selection of bidders and the exclusion of companies from procurement exercises, the bill will address those issues and will help us to ensure that only reputable companies win public contracts. I assure Parliament that addressing issues such as the living wage, blacklisting and inappropriate use of zero-hours contracts as well as issues to do with promoting equality generally will be central to the way in which we frame the regulations and guidance that will underpin the legislation.
I firmly believe that the bill will establish a national legislative framework for public procurement that is business friendly and socially responsible. Achieving such a balance is not always easy. I remember saying in the stage 1 debate that there are tensions running through the agenda that can often feel difficult to reconcile, but reconcile them we must. It is important to emphasise both sides of the equation and to be both business friendly and socially responsible so that we strike an appropriate balance. I believe that the bill does that, but the regulations and the guidance will be crucial to ensuring that we continue to get that right.
The contribution of stakeholders in the next stages of the process will be extremely important in ensuring that the commitments that I have given during the process on reflecting particular priorities in guidance are delivered and that we do that in a meaningful and robust way. We had a huge number of responses—more than 250—to the consultation on the bill, and we need to harness all that expertise as we move into the next stage.
I believe that, when we pass the bill—as I hope we will—we will deliver a piece of legislation that can make a big contribution to improving procurement performance and which, importantly, will deliver those improvements without imposing unnecessary or disproportionate burdens or opening our public bodies to substantial legal risk.
As I have alluded to, given that much of the bill is very deliberately couched in terms of enabling powers, stage 3 perhaps feels more like the start of a process rather than the end. As we work through the various pieces of regulation and guidance for which the bill provides, it is important that we continue to engage comprehensively with all stakeholders. I have given a number of commitments to partnership and cross-party working, and I am happy to restate that the Government will continue to approach all its work on procurement reform in a fully inclusive manner.
The bill will be a good piece of legislation that will make a difference. One point that was made at an earlier stage is that legislation is but one part of our procurement reform agenda. We were never going to resolve all the ills relating to procurement or some of the wider social and economic issues that we have touched on through one piece of legislation. We have done a good job in giving ourselves the tools to do so, but our wider programme of procurement reform continues to be very important.
Scotland is rightly gaining a good international reputation for its record and work on public procurement. The bill will contribute to that, but the work that comes after it on the guidance and regulations and on our wider agenda will ensure that we continue to get better at procurement so that the £10 billion that we spend every year is spent well and in a way that delivers benefits right across our society.
I move,
That the Parliament agrees that the Procurement Reform (Scotland) Bill be passed.
I am grateful to the Deputy First Minister for curtailing her speech. However, I must notify back-bench members that I will have to give them three and a half minutes if I am to call everyone.
I call James Kelly. You have a maximum of seven minutes, Mr Kelly.
17:30
I welcome the opportunity to take part in the stage 3 debate on the Procurement Reform (Scotland) Bill and indicate that the Labour Party will support the bill when decision time comes round at quarter past 6.
I agree with Nicola Sturgeon that the bill provides the £10 billion that the public sector spends with an opportunity not only to influence good procurement practice but to implement more fairness in our communities throughout Scotland. However, although we support the bill, it is a missed opportunity in that regard.
Labour interacted seriously with the bill throughout. We submitted a suite of amendments at stage 2, all except one of which the Government rejected. Although there has been some progress this afternoon on a number of amendments from Jackie Baillie and Ken Macintosh, if we were to compare the bill as introduced with the final version on which we will vote shortly, we would see very little difference. That makes us wonder how good the parliamentary process has been for such an important bill.
I will not rerun the arguments that we have had on the living wage—I am sure that members will be delighted to know that. I am obviously disappointed that the Labour amendments on that were not agreed to. I genuinely believed that this was a real opportunity to extend the living wage.
The Scottish National Party approach to the living wage is a result of pressure from campaigning groups such as the Scottish Trades Union Congress and the Scottish Council for Voluntary Organisations. As I said earlier, I am not convinced that the approach is strong enough and I remain to be convinced as to how much difference it will make.
On moving the living wage forward, I will be really interested in monitoring the impact of the bill and the changes that Nicola Sturgeon announced earlier. It would be useful if there could be a living wage unit that could do that, because we want to see whether the changes will result in more people being paid the living wage.
There remains a big issue, which I have consistently raised in recent weeks, in relation to people working on Scottish Government contracts in prisons. A couple of weeks ago, we had the example of National Museums Scotland shop staff, who are not paid the living wage. If Nicola Sturgeon is to match her rhetoric with implementation of the amendments that she lodged, there must be movement for those workers.
We also need a national living wage strategy. It is interesting that, in recent weeks, more businesses, such as KPMG and Nationwide, have come out for the living wage. There is an opportunity to extend the payment of the living wage, not only in the public sector but in the private sector throughout Scotland.
I regret that the bill’s provisions on community benefit were not strengthened to cover more contracts through a reduction in the threshold. An amendment on community benefit in relation to apprentices was not selected for debate, but I would have liked that measure to have been included in the bill. That could have been a real opportunity.
We could have been stronger on aggressive tax avoidance. We should have more control over those who practise aggressive tax avoidance and then take money from the public purse.
I welcome the movement on trade union recognition, with regard to Kenneth Macintosh’s amendment, and the movement on Jackie Baillie’s amendment on annual reporting. Annual reporting and monitoring are important to the implementation of the bill, and will enable us to see the effect of the £10 billion spend and some of the changes that have been made. However, movement on those issues was not matched by support for amendments on blacklisting, zero-hours contracts and supported businesses.
Jackie Baillie’s point about equal pay audits was important, particularly when we consider that 64 per cent of workers—256,000 people—who are not on the living wage are women. As Jackie Baillie said, that shows that there is still a long way to go.
I agree with Nicola Sturgeon that this is about not only a procurement bill but the procurement process. Businesses bring to MSPs their frustration with the process, which they feel is too complicated and needs to be simplified. Legislation aside, the process must be simplified.
To sum up, we will support the bill at stage 3. We have attempted to introduce robust amendments that would have made the bill and the procurement process stronger. I will be interested to see how the implementation of the bill plays out and what impact it has on that £10 billion of spend. I look forward to examining that in Parliament and throughout the country.
17:36
I rise to support the bill. I think that we have come to a position in which we have something that we can all agree on. Of course, if I had been doing this myself—if I had ever had the chance to be cabinet secretary—I might have done something very different. However, my additional chapter on compulsory competitive tendering remains in the desk drawer, where it may stay for some time.
The priority in getting the bill through Parliament and on to the statute book was to ensure that we had a procurement system that was simple to understand and easy to access and which maximised the opportunities for and minimised the burdens on companies that bid for contracts. Although we have been talking about big companies in many cases, I have had small companies on my mind. My concern has always been to do with the fact that small businesses often miss the opportunity to participate in Government contracts. If we can change that, we will have done something very worth while.
During the process, the Government has introduced some changes that will strengthen the position of the third sector and will do something for supported businesses, too. In their evidence to the committee, those groups said that they felt they had been disadvantaged by the process in the past, and I hope that they feel that their position has been strengthened, to some extent.
There is a significant case to be made for the view that the bill will require fine-tuning through regulation. Indeed, the minister has made it clear that the nature of the bill will enable that to happen, as the process continues. At stage 2 and stage 3, the Labour Party has tried particularly hard to introduce a series of other issues that, in my view, would have taken the bill beyond the issue of procurement. I would like to take this opportunity to apologise—almost—for voting against all Labour’s proposals. The reason I did so was that I want the bill to be about procurement and to be simple and easy to understand. Although I do not agree with all the principles that Labour brought forward, I think that it is essential for the good of Scotland, as we go forward, that those issues are all addressed. I hope that the Labour Party will find opportunities to bring them to the chamber and force them on to the political agenda so that we can discuss them in that environment. However, I do not believe that the bill was the place to have those arguments.
I think that we have a piece of legislation that is fit for purpose. It will find supporters and detractors among those who are likely to take advantage of it. At the end of the day, the bill will deliver a framework on which we can build over time. I genuinely hope that it will deliver efficient use of public money and a fair distribution of contracts across Scotland’s many businesses, supported businesses and third sector organisations. If we can look back and see that we have achieved that, we will have a great deal to be proud of.
We now come to the open debate. We are very tight for time. Speeches should be a maximum of three and a half minutes. I call Jim Eadie, to be followed by Hugh Henry.
17:40
I am pleased to have the opportunity to take part in this stage 3 debate. I pay tribute to all individuals and stakeholders who have contributed to the process of scrutinising and strengthening the provisions of the bill.
I believe that the bill at stage 3 is a better bill than the one that was first published. On fair trade and ethical practice, I argued at stage 2, with the support of the Scottish Fair Trade Forum, for measures to strengthen the bill. I was therefore pleased that the Government responded by lodging an amendment to require inclusion, as part of its procurement strategy, of a statement of a public authority’s general policy on fairly and ethically traded goods and services. In the words of the Scottish Fair Trade Forum, that will
“help build on the significant progress Scotland has already made”
as a fair trade nation. The bill, as amended at stage 2, will compel public authorities for the first time to state their policy towards ethical and fair trade. I very much welcome that and I am pleased to have had the opportunity to work alongside the Scottish Fair Trade Forum to make it possible.
I was also pleased that the amendment that I lodged for today, seeking to promote compliance by contractors and subcontractors with the provisions of health and safety legislation, has been incorporated in the bill. I record my thanks to the Scottish Hazards campaign group and families against corporate killers for highlighting that issue.
The Government has made it clear throughout the passage of the bill that it is totally opposed to the unacceptable practice of blacklisting and has worked closely with the trade unions to develop comprehensive guidance, which will require companies that are seeking public sector contracts to disclose whether they have been involved in blacklisting. That guidance includes a new standard prequalification questionnaire, which will require suppliers to disclose whether they have breached laws to outlaw blacklisting.
No one should doubt the Deputy First Minister’s commitment on that issue. Asked by me at the Infrastructure and Capital Investment Committee on 11 December whether the Government had gone as far it is possible to go, she stated:
“anything we can do to banish blacklisting will be done.”—[Official Report, Infrastructure and Capital Investment Committee, 11 December 2013; c 2353.]
I am pleased that the Government has followed through on that commitment this afternoon by outlining how that can be done most effectively. The Government’s approach has been welcomed by families against corporate killers, which stated:
“We have also been heartened by the recent announcement on the exclusion from public sector contracts of companies which engage in blacklisting, particularly because so many of those blacklisted have been so because of their health and safety activities.”
There has been much discussion of the living wage this afternoon. James Kelly said that the bill had not changed substantially since stage 1, but then proceeded to say that the amendment on the living wage was a result of pressure from the Scottish Trades Union Congress and others. The Government’s amendment, which was agreed to today, has placed in the bill an explicit reference to the living wage. Whatever differences we have, we should welcome that.
The Scottish Government is doing all that it can with the powers that it currently has to address low pay. The amendments that have been agreed to this afternoon will mean that businesses that want to work on public sector contracts will have to demonstrate clearly how they plan to remunerate their staff.
The test that must be applied to the bill is whether it will make a difference. Will it improve the pay and working conditions of people in Scotland? Will it drive economic activity across the supply chain? Can it strengthen the position of small businesses and the third sector? Does it promote fairness in employment, and does it promote fair trade practices? I believe that on all those crucial tests, the bill has succeeded. For that reason, it deserves to pass stage 3 tonight.
17:44
We should not underestimate the power and the sheer scale of what the public sector can do using its purchasing power. The sector affects every aspect of life in Scotland, and because of its significance, it has the opportunity to make a difference. One of the problems over the years has been that we have underestimated how we can use procurement as a force for positive change.
Alex Johnstone said that he does not support much of what the Labour Party is trying to do because he does not see its significance or relevance to procurement. In fact, if Jim Eadie is right to say that we can use procurement to effect changes in relation to health and safety, we can use it to effect changes in a raft of things across the public sector.
The cabinet secretary and Jim Eadie referred to the fact that we have moved forward as a result of what the Government has included in the bill about the living wage; a number of positive changes have been made. There is a genuine acceptance that procurement can make a difference and that we should use the powers of Parliament to improve things.
However, we should not underestimate what we can do. It is disappointing that we have pulled back from using those powers to their full extent. It is all very well to say that there will be a reference to the living wage in the bill, but we could have gone much further. Whether guidance will do anything remains to be seen, although I hope that it does. We could have gone much further and specified a legal requirement that would have forced the Scottish Government to say to its contractors and subcontractors that one of the conditions of their winning contracts would be that they would have to pay the living wage. That might well have a financial consequence, but it would be for the Scottish Government to ensure that the price is paid for the contract that would allow the living wage to be paid.
There is a good example of that happening already: Renfrewshire Council. In response to the Unison care campaign, Renfrewshire Council specified that contractors for care services must pay the living wage. There is a cost to the council for that.
Will Hugh Henry concede that at no point during the bill process have I used a financial argument against there being a mandatory requirement for the living wage? My argument has been entirely about the legal point. I agree that we should use the bill to the maximum in promotion of the living wage. He has never heard a financial argument from me.
The fact is that use of financial clout could have been underpinned legally, as Renfrewshire Council is doing, to make sure that the Scottish Government and every public sector provider did the same. The Government could do it, and it is being done; it is a shame that councils such as Renfrewshire Council are being left to do it on their own. We should have the full force of the public sector lined up in support of that initiative.
Let us support the bill. It brings positive changes, but we could have done much more.
17:47
I know that we are short of time, but in response to Hugh Henry, I say that I have not seen an awful lot of councils—Labour or otherwise—coming forward and pushing for the living wage. When we investigate them, some of their procurement practices leave a lot to be desired.
Will Linda Fabiani give way?
I do not have time. Having looked at all the work that has been done during the bill process, I am not convinced that we could have put the requirement on the living wage in the bill.
I am really pleased with what the cabinet secretary has proposed; she is absolutely right that public procurement already has a complex and demanding set of rules, but the bill has achieved a balance. It has been a long time coming, since the cabinet secretary’s Government came in in 2007 and started to revise procurement—to make it better and to streamline it by cutting down on bureaucracy. It is wonderful to have that two-pronged approach: it is business friendly as well as socially responsible, which is extremely important. Legislation is only one part of the reform agenda. I am glad to hear that we can look forward to more proposals, so that we can achieve our aims.
One of the things that I believe is business friendly and socially responsible is the emphasis on small and medium-sized enterprises in relation to public procurement in Scotland, which has defined localities and parts of local authorities doing a lot of public procurement. It means that the wellbeing of communities and the support for SMEs can be combined.
It is difficult in that we operate under European procurement rules, which can make it hard, but there are innovative ways of managing that. After all, small and medium-sized enterprises account for more than 99 per cent of enterprises in Scotland, more than 53 per cent of employment and 36.5 per cent of turnover. They are very important. There has been a lot of discussion about the possibility of breaking contracts into smaller lots in order that we can take best advantage of small and medium-sized enterprises, but European directives will have to be looked at carefully if we are to allow that to happen. We are, therefore, right to have fairly straightforward procurement legislation that allows us to look carefully at future directives in order that we can transpose them to the best possible advantage.
In East Kilbride, a task force has been set up by South Lanarkshire Council. Unfortunately, I am not allowed to go along to its meetings, because it seems to have a problem in respect of whether I can keep things commercially confidential—that is an argument that I will have with the council. I hope that the task force takes the issue on board and that South Lanarkshire, in looking at East Kilbride, considers the importance of small and medium-sized enterprises. That could be done with communities throughout Scotland for the wellbeing of those communities and their economic success.
17:51
Like Jim Eadie, I will apply the test of whether the bill will make a difference. He is quite right in doing that.
Some years ago, a bright and impressive school cook on the island on which I live and where my children went to school tried to introduce local lamb to the school menu. She went through hoops and hoops and hoops to overcome local government procurement policy. However, to this day, in Shetland—I hope to use the bill to encourage Shetland Islands Council to do a heck of a lot better on this—beef, lamb and fish for local schools, care centres and other public sector providers are not sourced locally. I hope that the community benefit regime that the Government is introducing and which all parties have supported in the passing of the bill, and the other measures in the bill, will help our councils and other public sector providers to ensure that procurement helps the local economy—in the case that I mentioned it was local agriculture—because that would be beneficial for many reasons, not least of which would be the food-miles argument that we make in a different context.
I hope that the bill is a considerable step forward, and I thank the Deputy First Minister for the spirit in which she has led on it. I look forward especially to Jackie Baillie’s annual report being used. She will forgive me if I hope that hubcos come under a degree more scrutiny than they have in the past. The Government has supported that mechanism today, which I applaud. It is a good step forward.
Linda Fabiani rightly pointed to the need for access to contracts for the small business sector. I do not think that any Government has gone far enough in that area. We have these big framework documents, and the big procurement structures that are now in place throughout Scotland make access tricky—to put it mildly—for smaller businesses of all kinds, including construction businesses, white-collar businesses, blue-collar businesses and professional businesses such as those that provide architectural services. I am sure that the Deputy First Minister has been on the end of numerous representations on the matter, and I hope that the Government is able to take a big step forward using the measures that we are going to pass today.
When we pass legislation such as this, much will depend on the secondary legislation that will subsequently be considered by Parliament, as the Deputy First Minister illustrated in her opening speech, so there is a job for all of us to do. I suspect that that is where we can genuinely make a difference on the issues that many members have raised this afternoon.
17:54
In the interests of time, I will dispense with the customary thanks, and will just say “Thank you. You know who you are.”
At its heart, the bill is about improving procurement in the public sector and getting the maximum advantage from expenditure of some £10 billion each year. However, for me and other members it is about much more than that; it is about how we use that substantial amount of money and the influence of the public sector to drive change in the standard and quality of services, and change in the rights of the people who are employed to deliver those services.
How staff are valued and treated matters, so the living wage, equal pay audits and public sector equality duties are all issues that should be dealt with in legislation rather than just in guidance. The one thing that I learned from my time as a minister is that it is what you put on the face of a bill that matters. That is a political choice, and I am disappointed that the cabinet secretary does not believe that the areas that I have mentioned are of sufficient importance to merit inclusion in the bill.
I want to touch on equality and the equal pay gap. In rejecting equal pay audits, the cabinet secretary could not help herself—she mounted the usual attack on Westminster. I have a question for members: how many times are equal pay, gender pay gaps and the pay gap itself mentioned in the body of the white paper? Is it once, twice or three times? They are not mentioned at all. It is necessary to go to annex D on page 607 to find a mention of wage equality. That tells us all that we need to know about the Scottish National Party’s priorities. Women are included in an annex simply as an afterthought.
I turn to the living wage. The cabinet secretary has portfolio responsibility for tackling child poverty and she would agree that there is unanimous agreement in report after report on both the scale of the problem and what we need to do to begin to tackle it. The majority of those reports say that there is much that the Scottish Government could do now, including implementing the living wage. We need look only at the sharp increase in in-work poverty and the lengthening queues at food banks to realise the importance of making work pay.
As James Kelly said, that would have a greater impact on women, who make up 64 per cent of the 400,000 workers who would benefit from it. The cabinet secretary knows that women are more generally employed in low-paid jobs and that many women work part-time. The bill could have made a huge difference to them; it could have been so much bolder on the living wage, on equal pay, on the public sector equality duty and on improving women’s lives.
The bill is not a bad one, and I welcome the cabinet secretary’s agreement to a number of amendments from across the chamber, but I think that it is a missed opportunity.
In advance of the referendum, the SNP has discovered women. I welcome that new-found interest. I am always delighted to see more women in the Cabinet, but that is no substitute for taking practical action to improve the lives of thousands of women right now.
We move to closing speeches.
17:57
In closing the debate for the Scottish Conservatives, I want to make two points. First, we broadly support the approach that the Government has taken to the bill as a whole and the approach that it has taken to the amendment process at stage 2 and stage 3.
The Labour Party, the Green Party and, indeed, the Liberal Democrats put forward a number of powerful arguments on amendments, but had we agreed to all those amendments, it would have had a negative consequence for business across Scotland. Had we imposed additional requirements in relation to the living wage, sustainability, animal welfare, reducing inequality, climate change, the third sector, wage ratios, equalities, zero-hours contracts, equal pay, tax avoidance and blacklisting all in one go, there would have been a significant risk that many businesses would have increased their costs and that the £10 billion of procurement that has been mentioned by all parties would not have gone nearly as far as we all want it to go. In particular, I think that even fewer small businesses and microbusinesses would have engaged with the public sector or even have attempted to win public sector contracts.
I think that there is broad agreement across the chamber that not enough small and medium-sized enterprises are doing business with the public sector; everyone wants to see them getting a larger slice of the pie and doing more business. However, had we implemented all the measures that members wanted to implement, the process would have been made more complex, rather than simplified. In the absence of a formal impact assessment, we might well have lived to regret making all those decisions.
My second point involves a plea to the cabinet secretary. She was right when she said that this is not the end of the process; in some ways, it is the beginning. An issue that I hope the Government will address when it comes to produce guidance and regulations is one that Linda Fabiani touched on in her speech—the size of contracts. The most common complaint that small businesses make is that they are precluded from getting involved not on official or legal grounds, but because the contract is simply too large for their business. That is an issue for businesses in almost every constituency in Scotland. The key question is how we can unbundle more large contracts so that small businesses have a fighting chance.
SMEs do not want special treatment; they just want the ability to compete against the bigger players and the opportunity to win more business. The Federation of Small Businesses Scotland put it well in its briefing for the stage 3 debate, in saying that the statutory guidance on procurement strategies and annual reports will be vital to ensuring that businesses get smaller lots and better small business access. Section 9 of the bill talks about facilitating the involvement of small and medium enterprises, but my plea to the Scottish Government is to go a step further. Under section 9A, guidance can be published on that point, so I ask the Government to think carefully about that in the coming months, so that we can get formal guidance that unbundles the size of contracts and gives smaller businesses the opportunity to compete.
18:00
As has already been said, Labour members will support the Procurement Reform (Scotland) Bill at decision time because we feel that public sector procurement can achieve much more than the positive effect of an individual contract. It has been said repeatedly that we spend £10 billion a year on procuring goods and services in Scotland and we need to see the full economic, environmental and social benefits that that vast sum of money can bring.
The Procurement Reform (Scotland) Bill could and should have been used to ensure the payment of the living wage in public contracts, to maximise community benefit from procurement, to demonstrate the Scottish Government's commitment to meeting its climate change targets, to condemn the use of exploitative zero-hours contracts, tax avoidance and blacklisting, to promote equality and support contractors committed to achieving equality, to encourage sustainable food procurement, to support skills development with apprenticeships, to support the third sector and to support people with disabilities into employment.
Those are the areas in which we have sought to strengthen the legislation, and we feel that the Procurement Reform (Scotland) Bill could have been a much more ambitious piece of work if the amendments lodged by Labour members had been taken on board completely. We do, however, welcome the Scottish Government’s support for Jackie Baillie’s amendments on equality, Ken Macintosh’s amendment protecting trade unions, and Sarah Boyack’s amendment on food procurement.
We also note the Scottish Government amendments passed this afternoon on the living wage, following the campaigning that we have done alongside trade unions and the Poverty Alliance on the issue. We also note the Government amendment on supported workplaces. Although those amendments are an improvement, we still feel that the Government could have gone further by accepting our amendments.
The Scottish Government’s amendment on the living wage requires contractors only to include a general policy statement on the living wage in their procurement strategies. Our amendment would have required the payment of the living wage to workers. The Scottish Government itself recognises that its amendment does not require the payment of the living wage to workers, so I have to ask what practical effect it can have.
In all the debates that have taken place in this Parliament on the living wage and procurement, the case of Rüffert v Niedersachsen has been mentioned. The Labour Party has proposed no practical way of getting over that, so can Mr Griffin explain how we can deal with the existing case law and the current rules in Europe?
Evidence was submitted by Thompsons Solicitors to the Local Government and Regeneration Committee, which Mr Stewart chairs, and I am sure that he would wish the Government to be as ambitious on the living wage as it was on minimum alcohol pricing. If it had been, the bill would have been stronger and the take-home pay packets of thousands of people who are on public contracts would have been boosted as a result.
The bill could also have been strengthened around zero-hours contracts and I ask the cabinet secretary why the Government could not commit to introducing contract performance clauses stipulating that successful bidders must not use zero-hours contracts, since contractors already have to demonstrate through key performance indicators how they are meeting the requirements of contract performance clauses. Could the Scottish Government not have used those KPIs to monitor zero-hours contracts? It would be helpful if the cabinet secretary could clarify that.
Procurement strategies and annual reports are another area in which we have welcomed developments. They cover community benefit requirements to deliver value for money, timescales for payments and a summary of procurement activity in the next two years. That is a lot of good information, which should drive up best practice and should help companies in bidding for work. However, a reference to supported businesses, which I pushed for in my amendments, is still missing from those procurement strategies.
We have spoken about the Government’s policy that every public authority should have at least one contract with a supported business, and it seems strange that we have a Procurement Reform (Scotland) Bill that does not set that commitment in legislation. We debated that issue earlier. If there are 44 public authorities that do not award a single contract to supported businesses, we really should have a stronger commitment.
The Scottish Government has worked to ensure that staff members who are directly employed get the living wage. Local authorities have taken a lead, too. Although there have recently been some moves in the private sector, it has not kept pace with the public sector on the living wage as much as we would have liked, considering what the Scottish Government and local authorities have done in areas such as Renfrewshire. The bill gave us the opportunity to force private companies bidding for contracts to pay staff the living wage and to bring about a transformational knock-on effect in the private sector. For that reason alone, we will look back and say that the bill was a £10 billion opportunity missed.
18:07
I again thank everybody who has contributed to not just the process of scrutinising the bill, but the debate.
I will pick up on a few themes that have been raised. The first theme is the process that the bill has gone through. I agree entirely with Jim Eadie: the bill has improved during its parliamentary progress. James Kelly managed to say both that the bill had barely changed during its progress, due to Scottish Government resistance to change, and that the Scottish Government had been forced into making changes on the living wage due to pressure. The reality is that we have made changes where the case for change has been made, in principle, in practice and in legal terms. We have made important changes on the living wage and the bill is now stronger in respect of the living wage. We have made changes on tax avoidance, reporting requirements, trade union recognition, and health and safety, just to name a few of the areas in which the bill has been strengthened. That is a credit to not just the Government, but everybody who has been involved in the scrutiny of the bill.
The second theme relates to the importance of the bill. I made this point in my opening remarks, but it bears repetition. Many members who have spoken in the debate have made this point. We spend £10 billion through the public sector every year, and it is vital that we ensure that that spend delivers economic and social benefits. That is what we have sought to do through the bill and what we will continue to seek to do through the regulations and guidance that will flow from it.
I accept the reality that Labour needs to manufacture divisions with the SNP. In fact, opposing the SNP now seems to be Labour’s only real purpose in life. Notwithstanding that, it is interesting that many of the so-called divisions that have arisen during consideration of the bill have involved how we achieve change, not whether we should achieve that change. Because of legal constraints, we might not always have agreed with Labour—and we might not always have felt able to agree—about how to advance certain priorities, but we have nevertheless sought at every turn to find the best way possible to achieve the same objectives.
The living wage is a case in point. I say with the greatest respect to Alex Johnstone that, unlike him, I have no objection to using the bill to advance the objective of the living wage; on the contrary, I would like to have supported Labour’s amendments. If I had felt that the proposed provisions were legally competent, I would have put them in the bill as introduced. I could not do that because of the legal restrictions that I have already outlined, which I will not rehearse.
I say to Hugh Henry that the guidance’s purpose is to support councils such as Renfrewshire Council further in doing what they are doing. The restriction is not on encouraging and supporting councils but on making the requirement mandatory under the bill. The objective is shared, but how we achieve it is the point of division. I hope that we can all unite on achieving the objective in the way that the bill enables.
It has on occasion been a bit amusing to hear Labour members talk about minimum pricing for alcohol—Mark Griffin used that argument in summing up. The issues are different, but I recall the debates on minimum pricing. Labour—with the honourable exception of Malcolm Chisholm—opposed the legislation to introduce that measure tooth and nail, because it thought that the legislation would breach European law and would risk a challenge on the grounds of European law. Labour members demanded to see our legal advice and said that, in all conscience, they could not pass the legislation because of the risk that it would breach European law. It is therefore a bit rich for them to make the arguments that they have now made about the Procurement Reform (Scotland) Bill.
I hope that all members will work with us on developing the guidance. The STUC, Unison and the Poverty Alliance, which I had a productive meeting with last week, have agreed to do that. Tavish Scott made the good point that the Parliament has a big job to do in scrutinising the secondary legislation.
Another theme has been striking a balance. I have always been clear that tensions run through the agenda and there are competing interests. Public authorities want value for money and must think about affordability. Bidders want simplicity and ease of access to contracts. Taxpayers rightly want value for money in its widest sense. Those different interests do not always align easily. We have done our best in the bill and we will continue to do our best to strike the right balance between them.
I will say a word about SMEs, on which Gavin Brown made points. I absolutely endorse the desire for SMEs to get a bigger slice of the public procurement cake. However, I will share some figures. SMEs make up 37 per cent of our economy and get 46 per cent of the £10 billion in public contracts. I would like that share to be bigger. Section 9 says that, when public authorities undertake a regulated procurement, they must look at how they facilitate SME involvement. Gavin Brown is right that the guidance will be important and I give him an undertaking that we will seriously consider the issue.
We have done a difficult job well. We have provided a framework for public procurement that allows us to develop the guidance and the regulations that will give effect to the economic and social objectives that many people rightly want public procurement to deliver. I have said repeatedly and I repeat that we are determined to ensure that the £10 billion of public sector spend on contracts is spent in a way that delivers economic growth, advantages and benefits for our businesses and social benefits and which ensures that disreputable companies do not get their hands on public money. We are determined to clamp down on tax avoidance, blacklisting and the inappropriate use of zero-hours contracts and to do everything that we can to promote and further the living wage.
Now that the bill is to be on the statute book, all of us can sign up to those objectives and we can get on with the job of ensuring that the bill delivers on them. I thank all the members who have contributed to the process and I encourage them to continue to do so. I ask the Parliament to pass the bill in a few seconds’ time in order to make big improvements in the agenda.
Members will wish to note that the members’ business debate that will take place immediately after decision time, at 6.15, is on a motion in the name of Bill Kidd, on recovering health costs for asbestos-related conditions and diseases.
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