Meeting of the Parliament

Meeting date: Wednesday, March 14, 2018

Official Report 946KB pdf

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Procurement

The next item of business is a debate on motion S5M-10962, in the name of Jackie Baillie, on procurement.

14:41  

The public sector spends more than £11 billion a year procuring goods and services—billions on construction projects. I am sure that we can all agree that that is money that should support the delivery of public services, providing decent jobs and helping to grow the economy.

It is hardly controversial to say that public money should be spent for public good. However, in this area, I believe that we are being failed by the Scottish National Party. Instead of the economy growing, Scotland is flirting with a recession. Productivity is down, industry after industry reports massive skills shortages, and growth is all but stagnant. Instead of supporting the delivery of public services, the SNP outsources to companies such as Carillion, which has contracts worth at least £630 million with public sector agencies in Scotland.

There are companies that have engaged in the blacklisting of trade unionists and companies that have engaged in poor employment practices. It is simply not good enough for the Scottish Government to say that it is in favour of public services and workers’ rights when its actions undermine them.

Promises that were made during the passage of the Procurement Reform (Scotland) Act 2014 have yet to be kept. Guidance that was published by the Scottish Government to support the act is welcome, but clearly there is little monitoring of implementation. The first monitoring reports for 2017-18 are due soon, but the Cabinet Secretary for Finance and the Constitution will not be publishing a report until the end of 2018-19. Why do we need to wait so long?

Jackie Baillie made the point that it is important that the actions that we take reflect the words that we use. Does she want to reflect on the massive extent of the outsourcing that was undertaken by the Blair Government, and also on the complete lack of action that was taken on the issue of blacklisting by Labour Governments from 1997 to 2010?

Oh dear; I would hope that the SNP would raise its game. This is about what we do with public money in Scotland. I invite Keith Brown to think and act in accordance with what he says that he believes in, because we would support him if he were actually to engage in fair work practices.

I well remember the debates during the passage of the 2014 act. Five times, the SNP voted against the inclusion in the bill of the living wage—apparently because the European Union would not allow that. A year later, after a campaign by trade unions and the Labour Party, the SNP provided the living wage to care staff, which was welcome. At the time, John Swinney told local authorities that that was still against EU procurement rules but that we would be doing it anyway. It is amazing what one can do when one has the political will. It is a shame that the SNP does not want to take that approach in all public sector contracts, because, instead of investing in decent, well-paid jobs, the SNP is helping to line the pockets of directors and shareholders—directors of failing companies whose eye-watering bonuses and pensions are protected while former Carillion employees have the rug pulled out from under them.

I want to speak about two Unite workers on Carillion Network Rail contracts, the first of whom works on the extension to Waverley station. He said:

“The impact of me being on a zero hours contact is unacceptable. My partner and I have two young children under the age of 10. Since the collapse of Carillion I have been going without work for days and weeks at a time.

There is a clause in my contract that says that I cannot take other work with another company ... I have been missing wages ... we struggle to make ends meet. The worst came recently when, having been offered no work whatsoever for two weeks, I took the hard decision to apply for universal credit.

I am fit and able to work, however I am now having to resort to claiming state benefits in order to keep a roof over my family’s head and put some food on the table.

On top of all of this, when I do work, I am having money taken off my wages due to an umbrella company’s greed. This is public money for a public service, why are umbrella companies who add nothing of any value to the project I am employed on profiting from the tax payers money? Something needs to change and change very soon.”

Rail worker two is employed on the Shotts-Cleland electrification project. This is what he said:

“I wait for a text every Friday to say if I will be working the following week. If I go away with my family there’s a real chance that my place at work will be taken by another worker and I’ll have no work. If I take a day off I might be replaced, if I call in sick I might be replaced, if I don’t work every shift I’m offered, no matter how short noticed, I might be replaced.

I pay an umbrella company up to £100 a week to get my own wages. I have no holiday pay, no sick pay. I can’t work anywhere else if there’s no work for a few weeks. I also pay both employers and employees NI contributions.

Furthermore, I can’t plan a day out at the weekends in case I'm offered work. I’m paid the national minimum wage for a safety critical job due to the money the umbrella companies take.”

That is a national disgrace. We desperately need an urgent review of procurement to end the exploitation of workers.

Those are not a couple of isolated incidents. The Aberdeen western peripheral route has been plagued by allegations of bullying and harassment, health and safety staff have been undermined, agency worker regulations have been ignored, and the project uses subcontractors who have used gangmasters.

Another example are the agency workers who are hired by the Scottish Government through a temp agency. Agency workers are supposed to be short term and used to allow the Government a bit of flexibility. Some members may recall that, about three years ago, the Scottish Government was—rightly—embarrassed by the Daily Record into paying agency workers the same as its permanent employees. All sorts of promises were made then by the SNP about the use of agency workers. Those promises ring hollow today.

One of those agency workers has been in touch with me. She has been employed at Disclosure Scotland as an agency worker for five years. That is not about short-term flexibility; it is about avoiding making her a permanent member of staff. Shame on the Scottish Government for doing that. That agency worker does not get sick pay or holiday pay, and she has no job security. Many of her colleagues are being moved from night shift to day shift. If that happens to permanent employees, they continue to receive their shift allowance, but an agency worker for the Scottish Government gets nothing. Some of the agency staff are being let go because of a downturn in work. There is no redundancy payment; there is not even a goodbye.

I remind members that that agency worker has worked continually for the Scottish Government for five years in a temporary position. I will give members an idea of the scale of the situation. Last year, 80 workers were on one back shift in her work. Aside from the four team leaders, two were civil servants on permanent contracts—the rest were agency workers. The agency worker tells me that those who are being let go are told that they should not worry because they can get work at the new social security agency down at Atlantic Quay, with the Scottish Government. Apparently, the agency is hiring a lot of agency staff. Is that what we should expect of the new flagship Scottish Government agency? Really—temporary staff? The Scottish Government could make them permanent.

This is the truth about procurement by the Scottish Government: those contracts, which are signed off in St Andrew’s house, are leading to the exploitation of workers at Shotts. Those decisions, which are taken by the transport minister, are leading to zero-hours contracts at Waverley station. Those decisions, which are taken by the economy secretary, are leading to the use of subcontractors with a history of using gangmasters. Those are the decisions of the Scottish Government, where agency workers on lesser terms and conditions are employed for years instead of permanent staff. That is the SNP supply chain. It is using Scottish taxpayers’ money to support the exploitation of Scottish workers, and that absolutely needs to end right now.

Then, of course, there is the troubled Scottish Futures Trust. We should not let the SNP fool us. Its method of financing construction projects is a variation of the private finance initiative. A report that the Scottish Labour Party commissioned from well-known economists, Margaret and Jim Cuthbert, exposes a range of problems. The current approach is cloaked in secrecy. There is evidence of secondary market sales of debt, which nets the equity investors up to three times the original capital that they put in. It is a bit like someone going to Wonga for a mortgage when they do not have to. We know that private financing now costs more than borrowing through the Public Works Loan Board—in fact, it is double the cost.

Will the member give way?

I will in one second.

One local authority could apparently get a loan from the Public Works Loan Board for 2 per cent interest, but it was forced by the SFT to use its private lender, with an interest rate of 4 per cent. I am happy to give way, and I invite the member to say whether he considers that to be good value for money.

Does the member at least accept that that is better value for money than the PFI projects that Labour supported?

If the member looks at Margaret and Jim Cuthbert’s report, he will see that their analysis suggests that the costs are absolutely the same. I suggest that he looks forward and does something about it, because he should know that the changes that were made to the hub building programme, as a result of the changed classification of public sector projects, mean that there is no cap on profits, no need to meet procurement guidance and a greater role for the private sector. The result of all that is more private ownership, more private control, more private profit and less Government accountability—that is the SNP way of doing procurement.

We need an immediate review of the Scottish Futures Trust. It is not delivering value for money; it is simply delivering bigger profits for the private sector. Instead, Scottish Labour would empower the public sector to deliver contracts in house, because the SNP is not getting value for money.

Let us look at the example of Burntisland Fabrications. At least £3 billion is invested in renewables, but just a tiny proportion of that money stays in Scotland. As the GMB would rightly point out, think about the jobs and investment that our communities would benefit from if more of the supply chain and manufacturing was anchored in Scotland. However, there is no planning and no joining things up. There is no anchoring of the supply chain in Scotland. There is little consideration of small and medium-sized enterprises. As the Federation of Small Businesses has said, there would be a significant boost for Scottish local economies if more procurement money was spent with SMEs—how disappointing it is that we do not do enough of that. We need to get a bigger bang for our buck. We need nothing short of a wholesale review of procurement, which would include construction projects and facilities management projects—the lot. We need to do a lot better.

Scottish Labour believes that everyone who is on a public contract must be on the living wage. We believe that there should be an end to bogus self-employment, which employers use to save on national insurance costs. We believe that there should be no more zero-hours contracts, no more blacklisting, no more insecure work and no more agency workers on poor terms and conditions. There should be no more umbrella companies and no more contracts with tax dodgers. The differences that Labour in government will deliver are investment in SMEs, anchoring the supply chain in Scotland and decent, secure, well-paid jobs as part of all public contracts. That is the difference that a Labour Government will make in Scotland and, indeed, in the United Kingdom. Shame on the SNP for its complacency in allowing Scottish taxpayers’ money to be used to exploit Scottish workers.

I move,

That the Parliament believes that the procurement of goods, services and construction projects by the Scottish Government and the wider public sector should provide value for money, ensure that good employment practices are followed, have a supply chain that is anchored in Scotland and provide opportunities for businesses and jobs; regrets that the Scottish Government has failed to achieve these objectives, and believes that an urgent review of procurement, including employment practice and the operation of the Scottish Futures Trust, is required.

14:54  

As Jackie Baillie has accurately pointed out, more than £11 billion a year is spent on goods, works and services across the public sector in Scotland. That is a substantial figure, and it represents a substantial contribution to our economy. It makes procurement one of our most powerful tools in helping us shape and deliver our ambitions for an inclusive society where the benefits of economic prosperity are shared.

The internationally recognised Scottish model of procurement takes into account a balance involving cost, quality and sustainability. It has four key strategic objectives—improving supplier access to public contracts; embedding sustainability in all that we do; maximising efficiency and collaboration; and delivering savings and benefits—and it has underpinned the significant progress that we have made over the past few years.

Our aim in creating public contracts Scotland in 2008 was for it to develop into a one-stop shop for advertising public contracts in Scotland, something that, not so long ago, was transformational in opening up public spending to the SMEs that Jackie Baillie mentioned. That aim is now a reality. The Procurement Reform (Scotland) Act 2014 introduced a mandatory requirement, and in the last financial year, public bodies advertised more than 15,000 contracts on public contracts Scotland, 75 per cent of the suppliers that were awarded the contracts had a Scottish address and four fifths of those suppliers were SMEs.

We are also delivering savings to allow money to be reinvested in public services. Collaborative procurement is continuing to deliver more than £150 million per year in savings. In fact, from financial year 2008-09 to date, Scottish Government-led collaborative procurements have generated just short of £1 billion in savings.

However, as members will know, our focus goes beyond savings and efficiency to considering how we can open up opportunities for businesses of all sizes to compete for public sector work.

The cabinet secretary talks about savings, but I cannot help but wonder whether some of those savings have been made on the back of poor terms and conditions for workers. Why does the Government not engage in fair work practices? What about the rail worker in Shotts or the agency worker in Disclosure Scotland?

The member raises a key point that I am just about to turn to. I think that savings, efficiency, collaboration, and growing and diversifying our economy are important, and they are part of—and absolutely not instead of—our procurement strategy. This is all about supporting community benefits, creating jobs for people from priority groups and supporting apprenticeships, work experience and training opportunities for our young people.

Will the cabinet secretary give way?

No.

All those things are features of our procurement policies. We are also using public procurement to drive fair work practices in our public contracts. Statutory guidance that was published in 2015 requires all public bodies to have regard to fair work practices in relevant contracts.

The cabinet secretary talks about striking that balance for the future of the economy in Scotland, but my concern—and the concern of Scottish Labour—is about the number of companies that are actually offering their employees the living wage.

I have a great deal of sympathy with what Labour wants to achieve, but the problem is that the actions of the Labour Party and Labour Governments have ensured that we do not have powers over employment legislation and other matters, which has impeded progress in this area. That is why when I talk about the important and significant matter—

Will the cabinet secretary take another intervention?

I am still answering the member’s previous one.

It is important that we recognise the legal constraints that we have to work within. Within those constraints, we have gone to the max on issues such as fair work and the living wage, and that is why it is so important that we keep the powers that we already have in relation to procurement in Scotland and do not allow the Tories to have their power grab and take them away from us.

We have been able to include other features such as the payment of the living wage, dealing with inappropriate use of umbrella companies or zero-hours contracts and recognition of trade union representation or workers’ voices more generally.

We are currently working with public bodies to develop best practice guidance that will help them implement the statutory guidance and promote fair work in their procurement decisions. We continue to work closely with the fair work convention to ensure that we support the five dimensions of the fair work framework in all that we are doing.

Blacklisting has been mentioned, and it is important that I highlight our action to tackle that. Scotland has gone further than any other part of the United Kingdom in addressing blacklisting in public contracts, despite the fact that employment law is reserved. Since 2016, it has been the law that Scottish public bodies must exclude businesses from competitions if they have committed an act prohibited under the Employment Relations Act 1999 (Blacklists) Regulations 2010 until they have taken appropriate remedial action or a period of three years has elapsed. That is the longest period allowed for under EU law.

Will the cabinet secretary take an intervention on that point?

I have two minutes left and have further remarks that I think are important to make.

Recent weeks have seen the liquidation of Carillion, a major contractor with the public sector across the UK. Our first thoughts are naturally with the Carillion employees, who will be concerned for their jobs, and we have taken steps to support the men and women affected. Indeed, I understand that more than 90 per cent of former Carillion employees on the Aberdeen western peripheral route site have been transferred to the other two contractors on the project.

It is no accident that Scotland’s public services are not as badly affected by the collapse of Carillion as those elsewhere in these islands. We have not entered into the wholesale use of private firms to deliver public services in the way that the UK Government has. That means that our schools, our prisons and our hospitals are not at risk.

Decisions around how and when to involve the private sector must be taken sensibly and with a view to the long term, unlike those involving the PFI projects, with their excessive private sector profits, that we inherited from previous Labour Administration.

Will the cabinet secretary take an intervention?

I have 40 seconds left. I am addressing questions that Jackie Baillie raised.

The transparency of decision making in procurement is also key. The Procurement Reform (Scotland) Act 2014 requires public bodies with a significant procurement spend to publish a procurement strategy. Bodies that have published a strategy will shortly be required to publish their first annual procurement reports under the act. Those will be used to prepare the Scottish ministers’ overview report of procurement activity across Scotland, which we aim to publish by the end of the coming financial year. We are confident that that report will tell a positive story, because we are proud of the progress that we have made in reforming public procurement over recent years, but of course we will look to see what further action we can take.

The UK Government’s shameless attempts to grab the power to regulate public procurement away from this Parliament, under the guise of Brexit, are not only an affront to the principles of devolution, but threaten to undermine everything positive that we have done in the procurement area. In the UK, it is only Scotland that requires, by law, that any decision to award a contract is based not solely on price, but on quality too. In the UK, it is only Scotland that requires, by law, that companies that have engaged in blacklisting are excluded from procurement procedures. In the UK, it is only Scotland that requires, by law, that public bodies consider community benefit requirements in major contracts. That is progress that we have made and it should not be taken away and handed back to Westminster’s control.

I move amendment S5M-10962.2, to leave out from “that the Scottish Government” to end and insert:

“the threat posed to the Scottish Government’s ability to continue to lead the way in promoting sustainable procurement by the UK Government’s attempts to use withdrawal from the EU as an excuse to take devolved powers away from the Parliament, and welcomes the Scottish Government’s plans to publish a report of procurement activity in Scotland by the end of financial year 2018-19.”

I call Jamie Halcro Johnston to speak to and move amendment S5M-10962.3. You have seven minutes.

15:03  

Thank you, Presiding Officer.

The importance of procurement policy in how Government operates should not be underestimated. The Scottish Government, not to mention our local councils, is responsible for the stewardship of £11 billion—money that is transferred from the taxpayer to external bodies in expectation of an appropriate return. Because of that, value for money should be uppermost in our thoughts on these issues, and I welcome the inclusion of value for money as a central point in the Labour Party’s motion today.

We are, it must be remembered, using public funds and are entrusted to ensure that those public funds are well spent. Procurement problems often end up in the national news, not simply out of journalistic desire to fill column inches, but because the public—quite rightly—get frustrated when the use of their money does not meet the standards of propriety that they would, and should, expect.

A positive feature in recent years has been the opening up of the procurement system across the UK, but it is by no means perfect. Although advances have been made to make procurement more accessible, it can still be unnecessarily complex and create barriers to the greater involvement of small businesses. If we want to ensure that there is an element of fairness in all of this, scale should not determine a business’s ability to compete.

One significant achievement at the UK level came in 2013-14, when the pledge to procure a quarter of the value of central Government’s goods and services from SMEs was met. Increasing the involvement of SMEs, the third sector and supported businesses was also a key priority in the Scottish Government’s procurement strategy, so it is disappointing to hear that the proportion of local authority procurement from SMEs in Scotland has fallen in the past five years.

The Scottish Government’s economic strategy also points to the benefits that procurement can provide and observes that it can be a driver of innovation and sustainability through the powers granted under the Procurement Reform (Scotland) Act 2014. The act was a significant piece of legislation but, in many ways, we find ourselves rehashing the old debates that took place during its consideration. We must be cautious in assuming that procurement policy can be used to cure all ills in our economy.

In truth, there is a balance to be struck. Procurement can be used to promote responsible business practices, but that must not come at the cost of raising the barriers for entry into the procurement marketplace. That includes the price not only of compliance, which may be justifiable, but of additional reporting and monitoring. Although the consequences of too great a regulatory burden may be unintended, they would also be inevitable. Such a burden would reduce the social good of involving small businesses and encouraging local procurement and, ultimately, there would be an impact on the value for money that we hope to achieve.

Employment standards are, of course, a significant issue. In addition to the areas outlined by Labour, there could be an opportunity to encourage more investment in the skills, training, apprenticeships and employee development that the modern economy will require. However, we will struggle to do that coherently if the needs of businesses are not considered.

Our existing procurement policy continues to be far from perfect. Some level of inefficiency will always be a feature of the system, but there are several areas where we still have some distance to travel.

The fiasco of the Scottish Government’s approach to information technology projects has rightly outraged many. Not only have costs escalated out of control in several areas, but projects have been delivered years behind the forecast delivery dates or dumped after considerable investment, as with the Scottish Prison Service’s finance system. The most pressing example for my constituents must be the handling of the farm payments system, which has cost many dearly at a time when farming incomes were already being squeezed.

There are, of course, areas where we could look to make positive innovations. Some work has taken place to uncouple large contracts to ensure that smaller businesses can compete, but it is far from enough. Millions of pounds are administered in supporting the roll-out of broadband but the process is slow, unwieldy and delivered through two separate schemes but with a single contractor. Support for other delivery providers on smaller projects through Highlands and Islands Enterprise seems to leave space for improvement.

In my region, the procurement of ferry services is under review, although we received some preliminary findings in December through Transport Scotland. That procurement procedure seems to have been a relative success in the past, with local people and businesses largely supportive of the current operator, Serco NorthLink. However, it now appears that the Scottish Government might be minded to bring those services in house again with a public operator.

The Labour Party’s motion refers to businesses having

“a supply chain that is anchored in Scotland”.

I want to steer us away from any sense of the Parliament taking a protectionist or insular stance, and I do not think that that is what the motion intends. The debate is not a moment for crying “Scotland first” but, instead, a way of considering some of the benefits of local procurement, particularly at local authority level, in a way that reflects our interests in value for money and wider sustainability.

In another example from my region, livestock farmers in Shetland whom I recently had the pleasure of meeting observed that they had greater capacity to supply to schools, hospitals and care homes across the islands. Last year, Fergus Ewing observed that the Scottish Government “could do better” in that regard and pointed out that the majority of food in the public sector—52 per cent—is sourced from outside Scotland.

My colleague, Brian Whittle, will speak in more detail on food and drink procurement. However, on procurement generally, I welcome figures highlighted by the FSB Scotland, which show that Shetland Islands Council is the top-performing local authority for procurement from local SMEs, followed by Orkney Islands Council. Indeed, the Highlands and islands as a whole perform well on the matter, with Moray Council, Western Isles Council and Highland Council all performing above average.

There are obvious benefits to local procurement where it is available: it reduces environmental impact and increases the sustainability of local supply chains, and we gain a greater security of supply. Centrally directed policy should not stand in the way of such measures, and best value should reflect those wider interests. Perhaps some of the lessons from my region would be instructive for the country as a whole, given that, on average, only a fifth of councils’ procurement spend goes to local SMEs.

We diverge from Labour on the need for “an urgent review”. There is little explanation of why that demand arises, and although I hope that all parties are mindful that improvements can and ought to be made, we cannot simply accept that urgent reviews need to be called in every area of Government policy in which improvements are possible.

Will the member take an intervention?

I am just finishing.

I welcome this Labour Party debate, and I hope that the Scottish Government will offer a constructive tone going forward. It would be helpful if ministers expanded on existing work relating to sustainable procurement later in the debate.

I look forward to progress being made on reforming procurement in a sustainable way that lets us meet the needs of the public sector and take advantage of the wider economy.

I move amendment S5M-10962.3, to leave out from “an urgent review” to end and insert:

“the Scottish Government should encourage and increase the use of sustainable procurement practices to cut wasteful spending.”

We now move to the open debate. Speeches should be six minutes. Time is really tight, so please be strict on yourselves.

15:10  

I thank Jackie Baillie for bringing the debate to the chamber.

We welcome Labour’s proposals, as they are very much aligned with Scottish Green policies, which recommend three core principles of procurement: the phasing out of schemes such as the Scottish Futures Trust, public-private partnerships and private finance initiatives; the promotion of legislation on a presumption in favour of local procurement from local suppliers; and the preferment of procuring from ethical and fair trade suppliers. Above all, we need to introduce a best-value framework for public authorities that incentivises procurement from local suppliers and social enterprises and that enhances the opportunities for workers to earn decent wages.

I concede that public procurement laws have been improved, but they should allow decision makers to source products and services on the basis of sustainability, equality, community benefit and local supply, not just on the basis of short-term costs and returns. One of the reasons for which we are in favour of the Teckal exemption being applied is that public authorities can ensure that local, publicly owned enterprises are favoured in procurement processes.

Despite my strong support for the European Union and my resolve for our continued membership of it, current EU procurement and state aid rules that prevent member states from favouring local enterprise or supporting emerging industries often frustrate the Green principles that I have outlined.

Let us consider the Scottish Futures Trust, for example. It was very welcome that Labour commissioned the report from Jim and Margaret Cuthbert that called for a root-and-branch review of that scheme. I am deeply concerned that such a major, publicly funded enterprise can be allowed to operate without effective scrutiny. Despite the trust’s assurance in its business plan that its function is

“to improve the efficiency and effectiveness of infrastructure investment ... leading to better value for money and ultimately improved public services”,

it is unclear whether its current annual operational budget of over £10 million actually delivers value for money to the public purse. Value for money should be procured via public services such as housing services.

Across Europe, Governments are increasingly looking to develop new and innovative policies to ensure that people have access to affordable housing. The Scottish Government’s national housing trust programme, which was devised by the Scottish Futures Trust, offers tenants the opportunity to—

May I correct the member? The national housing trust initiative was not initiated by the Scottish Futures Trust and is not connected to the non-profit-distributing programme that the Scottish Futures Trust runs. It is an entirely separate initiative.

I am happy to accept that clarification. Nevertheless, public money is going into offering tenants affordable rented homes with the caveat that, after five to 10 years, the homes must be sold to pay back the Government loans. Although sitting tenants have the first preference to buy their homes at full market value, many tenants will be unable to afford that, and they may be forced out of their homes and have to find alternative accommodation elsewhere.

Under the new housing legislation, the tenants cannot be forced out. I am sorry, but that is just factually incorrect.

I am happy to have this seminar, but I am afraid that I do not agree with Alex Neil. The Private Housing (Tenancies) (Scotland) Act 2016 allows landlords to serve an eviction notice when they propose to sell their property. That is still a ground for eviction.

In Edinburgh, the average house price is 42 per cent higher than the Scottish average. That makes this city the least affordable place in which to buy a home, yet tenants of so-called affordable homes have to pay the full market price through the national housing trust model. That is very short-sighted, and it is clear that it is not the solution to providing genuinely affordable houses.

Other issues should be self-evident. For one, we should not have to go looking for answers as to how public money is spent on procurement. Transparency is vital, which is why, as Jim and Margaret Cuthbert rightly point out in their report, there are issues to do with accessing what should be publicly available information. For example, in the region that I represent, City of Edinburgh Council will not publish details of its PFI schools contract, nor will Transport Scotland release sufficient information on the development of the Queensferry crossing. The Scottish Government’s and City of Edinburgh Council’s growth accelerator model for the St James centre remains shrouded in secrecy. Freedom of information releases are more like pieces of cubist art, given how much they are redacted.

Such a culture of clandestine practice has now been established and enshrined in Scotland’s public authorities, and it is common for public projects to be run as though they are private enterprises. That is unacceptable. Indeed, as the Cuthberts reported in the Sunday Herald in September 2017,

“lack of information, compounded in many cases by actual secrecy, is a major problem in assessing how Scotland’s public money is being spent”.

Last October, I asked the Scottish Government whether it had evaluated the method of producing whole-of-Government accounts, as the UK Treasury does, and, if so, whether it would publish those results. In its response, the Government directed me to a letter from the permanent secretary to the Public Audit and Post-legislative Scrutiny Committee concerning consolidated accounts, which, as members will be aware, are quite a different matter and only indicate how money has been spent instead of focusing on the wider long-term liabilities that are covered in whole-of-Government accounts.

Procurement plays a vital role in delivering public services and in supporting the economy. It is incumbent on all of us to ensure that the limited levers that we have are as robust as they can be. This evening, the Greens will support the Labour motion but not the SNP or Conservative amendments, as they delete key sections of the motion with which we agree.

15:16  

Jackie Baillie provided a compelling piece of evidence on the exploitation of workers. Use of public money on Scottish public workers must be made to a higher standard. The examples of agency workers, casual employment and zero-hours contracts are deeply concerning and deserve a better response than the typical one that we got from the cabinet secretary this afternoon when he said that it was all Westminster’s fault. The cabinet secretary and his fellow ministers are responsible for spending public money in Scotland and can set the standards for how those people are employed using such contracts. It is his responsibility and not Westminster’s, and he needs to be clear about that, too.

The deafening silence from the SNP back benches was also striking. Members there looked on in stony silence this afternoon, because they knew that they had been found out on the exploitation of workers. A few years back, hardly a week would go by when we would not hear from the Cuthberts—the husband-and-wife team of Margaret and Jim—who were often quoted by SNP members in support of their cases for more powers for Scotland or for independence, especially during the debate on the Scotland Bill in 2012. I used to enjoy my Scotland Bill Committee evidence sessions in which Margaret and Jim Cuthbert were brought before us to tell us about the latest piece of evidence that supported the SNP’s case. However, fate is such that they have returned to the political scene to undermine the SNP’s favoured private finance model, and it is a glorious irony that that has happened today. The Cuthberts’ report from last autumn highlights areas of concern for the Scottish Futures Trust, for the NPD programme, for the hub programme and for the growth accelerator model.

Will the member take an intervention?

Not just now.

As the Cuthberts stated:

“Most of these initiatives involve the setting up of various forms of public private partnership, designed so that the relevant capital expenditure is off the government’s books.”

In one neat sentence, they undermined the grandiose claims—which I remember well—of Alex Salmond in the 2007 SNP manifesto, in which he said that PFI was

“a type of privatisation, with all the disadvantages which that entails”.

A leading academic, Mark Hellowell, has pointed out that profits are not capped—the SNP said that they would be, but they are not—but are priced according to the rate-of-return expectations in the market.

Will the member take an intervention?

Not just now.

Peer-reviewed research has found that claims that the NPD model will eliminate excessive profits are not supported by the evidence. NHS Ayrshire and Arran points out that the NPD model is not a not-for-profit one, so it is pretty clear that the case that was put forward by Alex Salmond back in 2007—that he was sweeping away the PFI schemes—

Will the member take an intervention?

Not just now.

I will come back to the cabinet secretary in a minute. I am trying to make a very important point that he should listen to. The case that the SNP made in 2007, that the evil PFI schemes were being swept aside, has been undermined by all those academics and the SNP’s own favoured economists.

I will let the cabinet secretary come in now if he is prepared to admit that the SNP got it wrong in 2007.

We can focus on the past, and it is interesting to talk about what the Liberals were doing at that time in signing up to PFI deals. However, my question is quite simple. Labour has set out its stall: there will be no more revenue-financed, NPD pipeline projects, which might have been schools, hospitals and community facilities. What is the Liberal Democrats’ position? Is Willie Rennie’s position also that there should be no more NPD projects? That would be bad news for those who are looking for enhanced facilities across Scotland.

I am not ideologically opposed to the use of private finance in certain areas, but I am opposed to the hypocrisy of the SNP, which said in 2007 that it was going to wipe away the PFI schemes when the reality was that it just rock-bottomed them. That is what SNP members did in 2007 and they have been found out.

Let us go through the Cuthbert report. I think that it is pretty good. It talks about secrecy and says that the hubs are regarded as being

“beyond the scope of FoI”

despite having responsibility for handling considerable sums of public funds, including the terms of bank lending. The Cuthberts talk about the lack of clear definition for indicators used by the hubs and say that they are often “a non-standard form”.

Having a small number of tier 1 firms means that they will dominate large-scale construction in Scotland, limiting opportunities for others. There will be a loss of headquarter jobs, research and so on because of the tier 1 firms being predominantly from outside Scotland. That is an important point. The minister said that those firms have Scottish addresses but he did not say that they are headquartered in Scotland, and they do not bring the jobs, the research, the management jobs and the leadership jobs that would come with that. He talked about their having a Scottish address and was very careful in the language that he used.

The report also talks about SMEs being limited to just subcontracting. Is the Government exercising sufficient scrutiny over the Scottish Futures Trust’s activities? That is a big question that the Cuthberts ask. They also ask whether the sustainability of the financial commitment that has been entered into has been scrutinised. Has the Government’s expertise been hollowed out when so much has been contracted out as it has under the Scottish Futures Trust?

There are many big questions that the Government needs to answer, and it needs to give much better answers than the cabinet secretary has provided this afternoon.

15:22  

I begin on a note of consensus. I believe that the majority of members agree that public sector procurement should, to quote the motion,

“provide value for money, ensure that good employment practices are followed, have a supply chain that is anchored in Scotland and provide opportunities for businesses and jobs”.

That is, of course, the approach that informs the Scottish Government’s procurement strategy and it is why a community benefit requirement was given a statutory definition in the Procurement Reform (Scotland) Act 2014. It is therefore to be welcomed that there is continued strong support for the principle that decisions on procurement should be based on overall economic and social value, and not simply on the bottom line.

The remainder of the motion, however, displays the heroic levels of hypocrisy for which the Scottish Labour Party has become legendary. Before coming to the chamber to level accusations at the Government, Labour would do well to recognise the PFI plank in its own eye. When Labour Chief Secretary to the Treasury Liam Byrne stepped down, he left his successor a note stating, “I’m afraid there is no money.” When the Labour Party demitted office in Scotland, it left John Swinney with a pile of invoices, which more than a decade later are costing the Scottish taxpayer £1 billion each and every year.

Labour’s farcical approach to procurement and public finances means that over the years we will have shelled out £22 billion for projects that have a total capital value of £4 billion. If the Labour Party wants to be seriously taking on procurement, it should start by apologising for its reckless and short-sighted handling of public finances while it was in office.

Will the member take an intervention?

No I will not, because I am about to come on to something important, to which Jackie Baillie failed to give due weight. The debate—apart from giving Labour members an opportunity to polish their brass necks—would normally have contained much discussion on how EU procurement directives and European Court of Justice case law would be interpreted in a way that is consistent with member’s own political values. I would rather that we were in circumstances in which the debate could consider the evolving nature of the single market, developments relating to proposed revisions of the posted workers directive and what the potential implications of President Macron’s vision of a more integrated Europe are on EU procurement law.

Will Tom Arthur take an intervention?

I, will, if Jackie Baillie will let me finish my point.

However, Scotland now finds itself being dragged out of the EU against its sovereign will.

I will give way to a pithy intervention from Jackie Baillie.

It will, indeed, be pithy. Can Tom Arthur tell me why the Scottish Government avoids EU regulations that give temporary workers the same conditions as permanent workers after 12 weeks, by using pay between assignment contracts and agency workers? Why does the Government avoid EU procurement regulations in that underhand manner?

I do not recognise that intervention from Jackie Baillie, but I am sure that my colleague the Cabinet Secretary for Finance and the Constitution will be more than happy to address the specific point.

The implications of Brexit for our economy and our way of life are profound and catastrophic. Polling that was released today shows that 61 per cent of Scots say that both our economy and the wider UK economy will be worse off as a result of Brexit. That echoes the views of expert economists that I hear week in and week out as a member of the Economy, Jobs and Fair Work Committee. Given that a growing economy is fundamental to generating the revenue that is necessary for ambitious public sector procurement, the devastating economic damage that would follow a hard Brexit would have a severe impact on tax revenue, which would present huge challenges to the Government in respect of maintaining sustainable procurement that delivers wider social benefits.

It is not just Brexit’s threat to the economy that would harm procurement in Scotland; the UK Government’s power grab could make it all but impossible for the Scottish Government to deliver sustainable procurement. That is the fundamental issue in the debate, as is highlighted in Derek Mackay’s amendment. Without powers over procurement in this Parliament, and without common frameworks that are agreed by consent, all of our deliberations will become academic. I fear the consequences if power over procurement in Scotland were to become the sole preserve of a right-wing hard-Brexit Tory Government at Westminster.

What concessions would be given in trade deals by a weak and isolated UK, and what would be the implications for our publicly owned national health service? Would there be a roll-back on workers’ rights and protections, thereby incentivising bidding companies to engage in sharp practice in a race to the bottom? We do not have to look very far for the answers. It is clear that the hard Brexiteers are driving the agenda. They know that Theresa May is asking for a cherry-picked settlement that the EU simply cannot deliver and they are biding their time, willing the talks to fail so that when we reach exit day in little over a year, a bonfire of regulations can commence in earnest. We in the Scottish Parliament have a solemn duty to ensure that all the powers that currently sit with this Parliament, including those that relate to procurement, remain with this Parliament.

The future arrangements, laws and processes regarding procurement across the UK must be achieved through agreement—not through imposition. Our immediate priority must be to ensure that the powers of this Parliament are retained. Once that is achieved, however, we will then, as a Parliament, have a role to play in debating and discussing what shape the future procurement landscape should take in a post-Brexit world. For me, that must be a world in which procurement continues to be used to promote the fairest and most robust of workers’ rights, one that is bold in its use of procurement as a lever to promote sustainable economic growth, and one that is as transparent, open and accountable as possible. I believe that those are principles upon which genuine agreement can be found.

You are out of time, Mr Arthur.

Presiding Officer, I regret that that such future discussions will be necessary, but I still hope that the catastrophe of Brexit can be averted. However, if, as seems increasingly likely, we are to be torn out of the single market, it is vital that this Parliament has the powers to shape future procurement in Scotland.

15:29  

I have heard some speeches in this Parliament, Presiding Officer, but that was an absolute belter. Tom Arthur’s approach was to talk about anything but the subject at hand—to talk about any other Government, any other council or any other authority, but not the responsibilities that his party has for public procurement in Scotland. It is an important issue and an important part of our economy.

Will Neil Findlay give way?

No, I will not. Tom Arthur should sit down.

Procurement is an important part of our economy that sustains many small and large businesses and millions of jobs. It has the potential to deliver a wide range of economic and social policy objectives, but all too often those policy objectives come way behind financial considerations.

During the passage of the Procurement Reform (Scotland) Act 2014, Labour members submitted numerous amendments, including amendments that would have ensured that no public money was paid to contractors that engage people on zero-hours contracts, and that no public money went to companies that are guilty of blacklisting or are corporate tax avoiders. All those amendments were voted down by SNP MSPs, who trotted on as usual, voting as the minister told them to vote. Not one of them had an independent thought in their head.

Today, I want to focus my comments on the construction industry. For decades, it has operated as one big scam. Main contractors do all that they can to screw more money out of their clients, then they seek to screw as much money as they can out of their subcontractors, and that is repeated down the subcontracting line. All of it is about profit maximisation over build quality and the care and welfare of employees. Important issues such as health and safety, the provision of washing and toilet facilities on sites, and effective trade union recognition are all barriers to profit maximisation.

That is why we had the blacklisting scandal, in which thousands of trade unionists and environmental and social justice campaigners had their careers and families’ lives destroyed by a conspiracy that was funded by some of the biggest construction companies, including Sir Robert McAlpine, Laing O’Rourke, Balfour Beatty and, of course, Carillion. The Scottish Government said that its blacklisting guidance would prevent those companies from getting future contracts until they had apologised, paid up and cleaned up, but that has been repeatedly ignored. McAlpine’s is building the flagship V & A gallery in Dundee, Laing O’Rourke is building the Dumfries hospital and preventing Unite from accessing the site, and Balfour Beatty is working on the Aberdeen bypass. Carillion had dozens of contracts worth hundreds of millions of pounds.

I will give way to the cabinet secretary if he can tell me how many companies have been barred from applying for contracts through the blacklisting guidance. Can he tell me how many? Exactly! Not one!

I have also raised in Parliament the issue of bogus self-employment and workers receiving wages via so-called umbrella companies. Those companies are endemic in the construction industry and are operating on publicly procured projects funded via the Scottish Government and the Scottish Futures Trust. Workers are forced to work via an umbrella company and are paid the minimum wage, then required to pay both employers’ and employees’ national insurance contributions, and to pay for a pay slip. They are then told to claim money back via expenses, which means that their employers avoid their responsibilities. Those practices were at play on the Queensferry crossing, and they are at play on the Aberdeen bypass and many other contracts.

I happily accept an intervention from Mr Brown.

Does Neil Findlay associate himself with the remarks of Jeremy Corbyn, who blamed many of those things on what he called, as Nigel Farage has, “cheap foreign labour”? Does he have the same view of—

That is garbage, and Keith Brown knows it. Don’t tell lies!

I would like to be allowed to finish my intervention. Does Neil Findlay have the same view of people who come from overseas to work in this country?

Don’t tell lies!

Mr Findlay, do not use terms like that in Parliament, please.

Mr Brown should correct the record, because he knows that that is not what was said, but he twists people’s words.

We have seen how pay as you earn has been exploited on contracts for which Keith Brown is responsible. He is responsible, and he should take his responsibility seriously.

We are still waiting to see the full effects of the Carillion collapse. Employees have been scammed out of their pensions and then signed up again by a new employer, but under umbrella companies. On Network Rail contracts, the Scottish Government should use its cash and influence to push Network Rail to establish an in-house contracting division to deliver those essential contracts.

In 2017, Scottish Labour commissioned the report by Jim and Margaret Cuthbert on the Scottish Futures Trust and its hub activities. That report exposed the lack of transparency around hub companies and the secrecy around them and who is investing in them, and it highlighted poor value for money.

I support the motion in the name of Jackie Baillie, but when I look at what is going on in the construction industry, I start to come to a different conclusion. I look at the Edinburgh schools project, the trams project, the private finance initiative, the non-profit distributing model—the only problem with the non-profit distributing model is that it distributes profit—blacklisting, umbrella companies and all of the other stuff that is going on in the construction industry, and I think that we might be getting to the stage at which we have to think about holding a public inquiry into how the construction industry operates, because it is a scandal.

You are at six minutes, Mr Findlay.

There is also a human cost. Last year, I heard from a Unite representative about a group of African men who were working on a major public contract for a foreign-based subcontractor. Some 30 or 40 of them were living in one house, and were paying £400 a month to do so. One man’s wife, who was living in Portugal, died during childbirth along with her child, but the employer did nothing. The men who worked with that man had to have a whip-round to send him home to deal with that tragedy.

You must conclude, Mr Findlay.

That man was working on a Scottish public sector contract. People should be ashamed.

I recognise that members’ passions run high in debates such as this, but I ask everyone to refrain from using unparliamentary language at all times.

Members should tell the truth, in that case.

I meant you specifically, Mr Findlay.

15:36  

I have come in at the right time to calm things down, as usual.

I would hope that we can all agree on certain things, such as that we want to ensure that everyone gets their trade union rights, that there is an end to blacklisting, that there is an end to zero-hours contracts, that there is an end to unfair treatment for agency workers, that there is maximum transparency on how the public pound is spent, that profits from any kind of contract are not siphoned off into offshore funds at the expense of our country, and that umbrella companies are not allowed to misuse their legal status for immoral purposes.

I want to say something to Labour in a non-partisan way. The Labour Party must practise what it preaches. It is sad to admit it, but last Saturday afternoon I listened to Mr Leonard’s speech to the Labour conference in Dundee. One of the things that he rightly advocated was that we should do what we can to drive down the cost of existing PFI contracts. Indeed, I tried to do that, with some success, when I was the health secretary. However, that message has not reached some Labour-controlled councils such as North Lanarkshire Council. For example, during the council’s budget discussions in the past month, the SNP and others urged the council to do exactly what Mr Leonard said with regard to the massive payments that have been made on behalf of the taxpayers of North Lanarkshire over the past 10 years to PFI contracts for the school-building programme. However, every Labour councillor refused to review the PFI contracts.

Before Labour Party members start criticising everyone else, they should look in the mirror and think about what Labour councillors are doing. They should think about their track record. They sit there beside Lewis Macdonald, who is a fine man for whom I have a lot of time. However, I have been here long enough to remember when Lewis Macdonald was a deputy minister in the health department, under Andy Kerr, who was the health minister—it is a pity that Willie Rennie is not here to listen to this; I thought that we were supposed to listen to the rest of the debate after we have spoken. I remember when Andy Kerr, as Labour’s health minister, tried to privatise a general practitioner practice in Lanarkshire and tried to privatise Stracathro hospital in the north-east of Scotland.

We will not take any lessons from the Labour Party. It has a shameful record, particularly on PFI contracts such as the contract for Hairmyres hospital, which will end up costing five times the cost of building the hospital. That contract was initiated under a Labour Administration. Indeed, I think that Jackie Baillie was a minister at the time that the Hairmyres contract was signed.

I am always grateful when the member allows me to make an intervention. I think he will find that history might prove him wrong—I was not a minister for that long. Were the schools in North Lanarkshire built under the SFT, operating to the very rules that were set under his Government?

I think that Jackie Baillie will find that they were mainly operating to the rules of PFI. I did not say that she was a minister for long; I said that she was there at the crucial time when the deal was done. She must therefore have been part of the collective Cabinet responsibility for that gross misuse of money to privatise a resource. Part of the deal was that, unlike in the NPD projects, at the end of PFI projects such as the one for Hairmyres, the facility is privatised, because it goes into the ownership of the private contractor. Under NPD, at least the facility ends up as a public sector asset.

I give way to Mr Scott. I am dealing with all the Tories at once.

I call John Scott, but Mr Neil still has only a minute and a half left.

I thank Mr Neil for taking an intervention. Given that he mentioned Andy Kerr, who famously did all this work under PFI, does Mr Neil, as a constituent of mine and a representative of the Lanarkshire area, remember the things that Mr Kerr was seeking to close at that time—namely Ayr hospital and a hospital in his area? He might wish to comment on that.

I am not sure that that is relevant. Mr Neil, you have less than a minute.

That is a very helpful intervention. I have as good a memory as John Scott, who is absolutely right on that point.

Were you asking me to close, Presiding Officer?

Yes.

Unfortunately, therefore, I have to close. I say to the Government that reforms are needed—I will briefly mention two. First, I am not convinced about the use of framework contracts, and I think that we need to review them. Secondly, when it comes to housing, where the procurement is very diffuse, we are missing a big trick. We should have a national house-building agency to get the scale into house building through procurement in Scotland to create manufacturing opportunities in modular housing and the like; that would create added value and real jobs, and boost the economy. In particular, I hope that the agency would be located in my constituency.

I thank Mr Neil for reducing the political temperature.

15:42  

I am delighted to speak in this important debate. In fact, to be quite honest, these days I am delighted to speak in any debates on issues on which the SNP Government has competence. I thank the Labour Party for bringing this issue to the chamber.

About a year ago, I led a Scottish Conservative Party debate on public food procurement after researching where food for Scottish schools and hospitals came from. As I reported last year, the Scottish Government, through its central Excel contract, was importing £1.2 million of chicken from Thailand; it was also importing mashed potato, root vegetables, fruit, dairy produce and meat, all of which are produced right here in Scotland. Pre-packaged, processed food sourced from outside these shores is far too prevalent on the meal tables in our schools and hospitals.

Our farmers produce the highest quality food. They are charged with custodianship of the countryside, paying the living wage and ensuring the highest of animal welfare standards, but when it comes to public procurement, a high proportion of the food for our schools and hospitals, much of which could be sourced locally, comes from cheaper imports. That has a huge implication for the obesity strategy, the mental health strategy and just about every other strategy that the SNP brings to the chamber, but somehow those dots are never joined up. The call for support for our food producers remains unanswered by the SNP; there has been little improvement, despite the subject having been brought to the chamber last year, and despite the promise of a good food nation bill—I wonder where that has gone.

The information and communications technology sector is another area in which the public sector ships public money out of Scotland. Overspend in the final bill and overrun are recurring themes in Government ICT projects, especially in higher-value projects, which according to an Audit Scotland report are delivered by a small group of offenders. Scotland has been awarding all of its major local government ICT contracts to global foreign companies that have added no value to our economy. One company has hoovered up north of £600 million from the public purse through ICT projects, with the City of Edinburgh Council awarding the initial contract and Glasgow City Council and Borders Council piggybacking on to that contract without a public procurement exercise; I thought that that was illegal. Incidentally, that same company is responsible for the debacle that is the Scottish Government’s common agricultural policy payments system, which is still unresolved despite currently being five times over the original budget of £29.5 million.

It can be done. Manchester City Council has dramatically increased spending in the local economy, which has gone up by some 20 per cent. The council made a conscious decision to increase where possible the spend on Manchester companies, which has gone from 51 to 72 per cent. In monetary terms, that has a value of £123 million. Crucially, nearly 60 per cent of that spend went to small and medium-sized enterprises. That is important, because access to the public procurement process for SMEs is vital if Scotland is to grow companies from SMEs into major international companies. It is a stepping stone. However, we are all aware that Scotland has an overreliance on and a high propensity of SMEs and is disproportionately short of major global players. That relates directly to the point in the Labour motion, which talks about “value for money” and

“a supply chain that is anchored in Scotland”.

In ICT, nearly three times as much money is spent with non-Scottish SMEs as with Scottish SMEs. For every £15 of Scottish public money that is spent on ICT, only £1 is spent in Scotland. Overall, only 4.8 per cent of the ICT spend in Scotland stays in the country.

We need to attract talent from schools and universities. In ICT, we have a skills gap centred around software development skills, but the ICT industry requires far more skills than that, especially in project management, quality, contract management and infrastructure delivery capabilities, to name but a few. We need a strong indigenous ICT sector for our university and college graduates, not to mention the apprenticeship places.

I am pleased that the Labour motion specifically mentions construction, because I have been approached repeatedly by representatives of the construction industry in Scotland intimating that public contracts are being awarded to companies outwith our borders only to be subcontracted back into Scotland and Scottish companies, minus a hefty slice of the pie.

The same issues are evident in every sector. Audit Scotland highlighted that in posing the question about numbers and how many contracts are awarded to whom, and I have submitted a written question to the Government on that. However, Audit Scotland and I found that the Scottish Government was not readily able to give any kind of substantive answer. Now we know why the Scottish Government is reluctant to release the figures. Given that general lack of support and investment by the SNP Government and the subsequent low levels of trust or confidence in the local supply chain, it is not surprising that the ICT industry struggles to attract talent or to deliver the outcomes.

That brings me to Derek Mackay’s amendment, which may be the most ridiculous amendment that I have witnessed in my time in the Parliament, and to Tom Arthur’s rambling. The SNP Government has found the most strangled route to somehow include the United Kingdom Government and Brexit. To suggest that the Scottish Government leads the way in promoting sustainable procurement beggars belief. It has all the powers that it could possibly need to ensure that indigenous Scottish businesses at the very least get a fair crack of the whip, but it refuses to use them. Contracts for public services are farmed out to North America, New Zealand, India, South America, the far east and Australia, to name but a few. Unless I am mistaken, none of those countries is currently in the EU.

It is absolutely pathetic—although at least consistent—that the SNP would rather use all its energy to find a way to blame somewhere else for its failings than use Government powers to actually support Scottish business. Better for Scotland? I think not. Scotland is the biggest exporter of public sector money in Europe.

It is time to close, Mr Whittle.

I will leave it there, Presiding Officer.

15:48  

Procurement will always be a challenge. It is a balancing act on a variety of fronts. Do we want to get something now and take on debt to pay later, or do we wait, save up and buy it at a later date? Do we purchase the cheapest option, which is sometimes called value for money, or do we pay a bit more and support local businesses and the economy?

In past times, Labour councils would apparently give contracts to companies with which they had a close relationship. They paid over the odds and there were more frequent delays than we see today. Then PFI/PPP was the bright, shiny new thing. I was a Glasgow councillor at that time, and I was not happy about the PFI projects that were to renew all the secondary schools in the city. Perhaps most galling was the fact that the Labour councillors would not admit that PFI was the only option and that they were doing it reluctantly; rather, they pretended that they wanted PFI all along. We got some good new schools, but we paid well over the odds for them and new problems arose such as questions of who was responsible for which repairs and whether something was classified as vandalism or wear and tear. School facilities also became unavailable at a reasonable cost for out-of-hours clubs and other activities.

Will the member take an intervention?

No. If Mr Findlay showed the Parliament a bit more respect, he might be given a bit more opportunity to speak.

I remember problems with school IT in Glasgow because the senior officials did not have the IT expertise to deal with the PFI companies and we ended up with the senior officer from the education department resigning his post when the work went seriously wrong. Labour’s record on procurement for services in Glasgow has also been far from perfect. I remember when the Labour council put money advice services out to tender and nearly all the citizens advice bureaux in the east end closed.

PFI/PPP and, to some extent, NPD, have been positive devices to bring in additional funding, but they have also been negative devices to get around the accounting rules on debt. Whichever way we look at it—whether we lease schools or borrow to build them—the money must be paid back sometime. I argue that the Scottish Government has done its best to provide much-needed infrastructure across the country while living with a range of restrictions, including the need to keep to the EU rules on borrowing and procurement and the requirement to maintain repayments at a reasonable level of interest, which is currently 5 per cent.

Were Labour ever to get back into power, one of my big fears would be that, on the basis of its history of borrowing recklessly, it would not stick to an interest rate of 5 per cent or any other prudential level of borrowing.

Is the member going to blame the EU for the SNP Government giving much of the ICT contracts to North America?

If the member has a specific contract to ask about, he should ask the relevant council or Government minister.

The point is that the EU has restricted us from awarding contracts to more local Scottish companies. The bad side is that that has not helped our companies; the good side is that that has been fairer—we all know that some other European countries would not allow Scottish and British companies in if it were not for the EU rules.

There may be some tiny silver linings within the huge Brexit cloud—maybe leaving the EU will remove some of the restrictions; maybe we could favour Scottish companies more—but we must be realistic, as that could have a downside, too. On the positive side, we could spend more money with Scottish organisations, and that money would more likely be recycled into the Scottish economy. However, Brexit might mean that we pay more for things. If we reject a cheaper product from Germany or China, or chicken from Thailand, and we pay more for goods, services or infrastructure, we would have less money and, I presume, less infrastructure to show for that.

I would be delighted if we could favour Scottish organisations, but we must consider how much we are willing to pay. Would we pay 10 per cent more for a Scottish product than for what is available elsewhere? Would we pay twice as much? What if the Scottish product was very different or much less popular, such as Scottish wine? I wonder whether Labour will argue that all the wine in Parliament should be from Scotland.

A key lesson that I learned in my economics class at the University of Glasgow is that trade can benefit both countries. We are better at producing and selling salmon, whisky and financial services; others are better at producing and selling rice, bananas and wine. If we are to restrict the importing of goods and services as Labour suggest, we should not be surprised if other countries cut the amount of Scottish goods that they buy. That could seriously damage the whisky industry and other sectors, so we have to be a little bit careful that we do not all lose out.

Before we lecture others on how they should behave, let us consider whether or how we personally set an example. Do all the Labour members buy Scottish meat and butter all the time? Do they buy Scottish beer in the pubs? Are they willing to take their holidays in Scotland? We all need to set an example if we want others in the public sector to do that, too.

To conclude, I want to mention the briefing from the Scottish Council for Voluntary Organisations. I thought that it was helpful, and I am certainly positive about the four principles that it sets out. However, it also suggests that

“All procurement professionals must feel able to move away from a risk-averse approach”.

Although I broadly agree, the risk is that we would go back to where we used to be, with Labour councillors apparently giving contracts to their chums in the private or public sector and the public losing out as a result.

15:55  

I am glad that the member is so keen on Scottish produce, but I wonder whether he is still boycotting Tunnock’s teacakes. Perhaps we will find out.

I am grateful to Jackie Baillie for securing time for the debate. As we have heard, public sector procurement is worth £11 billion a year to the Scottish economy, and it is, as Derek Mackay has said, a powerful tool. We should be using that money to deliver high-quality public services, provide decent, well-paid jobs and ensure inclusive growth in our whole economy in order to reduce inequality. Willie Rennie is right: Scottish ministers should be setting standards. However, as we heard in Jackie Baillie’s blistering speech, the SNP Government is failing to make full use of its powers over public procurement to make all this a reality, and, as a consequence, we are missing huge opportunities to balance our economy in a way that is fairer for all.

Frankly, it is a scandal that the SNP Government has consistently refused to support the extension of the living wage to public sector contractors. Its lofty rhetoric on progressive values means very little when it has literally refused on numerous occasions to put its money where its mouth is. Extending regulation of the living wage to all public sector contracts is well within the Parliament’s competence, and it is a practical way of lifting living standards. The failure to do that means that our constituents are missing out on fair and well-paid jobs.

We should immediately stop awarding billions of pounds of public contracts to companies that do not pay the living wage. In that respect, the Procurement Reform (Scotland) Act 2014 was a massive missed opportunity. Likewise, it is an outrage that billions of pounds’ worth of public sector contracts are still being regularly handed out to companies that use zero-hours contracts and that have been known for notorious anti-worker blacklisting practices.

I was the minister who took through the parliamentary process the bill that became the 2014 act. The member will also know my attitude to Brexit—I tried every possible legal way of building what she suggests into the bill, but EU rules would not allow it. Does the member not agree that one of Brexit’s benefits will be the ability to have far better and more flexible procurement rules?

I thank the member and former minister for his intervention, but I understand that John Swinney was able to do what he has just talked about in respect of care. I defer to colleagues on the Labour benches who were here at that time and who have already said today that SNP members voted down Labour amendment after Labour amendment.

Let me turn to another favourite Alex Neil topic: local government. Reform of public procurement has the potential to improve the running of services, and harnessing in a positive way the collective procurement power of Scotland’s 32 local authorities could have a transformative effect on our local services and economies. Local authorities’ procurement power would also work in the context of city region deals. Such investment has huge potential in Scotland, but without strong leadership, particularly on acceptable employment practices, the deals themselves could miss further opportunities to reduce inequality and promote inclusive growth. Indeed, that concern was expressed by the Local Government and Communities Committee. There could also be a reinforcement of the status quo and a further rewarding of private companies with huge profit at the public’s expense. The procurement process for over £100 million of public investment in the Glasgow city region deal was announced just last week and is now under way, but what guarantees are there that that money will be spent on companies that treat their workers fairly?

As the convener of the cross-party group on construction, I have, like many members, watched in horror the troubling collapse of Carillion and its effect on the Scottish economy, and I associate myself with Neil Findlay’s comments in that respect. The situation has affected more than 1,000 workers in Scotland who are involved in the delivery of at least eight major public sector contracts. With the risk to jobs and the cost to the public sector to keep services running as a result of the collapse, it is a prime example of the problems of private sector involvement in public sector contracts and private stakeholders putting profit before people.

Will the member give way?

I am not sure how much time I have, but I am happy to take the intervention.

You have a minute and a half.

I thank Monica Lennon for taking the intervention. She mentioned the construction industry. The NPD model has brought a lot of additionality to that sector. Many people have argued that it kept the sector out of recession when there was that pipeline of investments. How does she think construction would fare if there were to be no more revenue-financed projects, as is argued for by the leader of the Labour Party in Scotland?

Monica Lennon, you have one minute.

That is why we need a root-and-branch independent review of public sector procurement, as is set out in the Cuthberts’ report. There are real concerns about NPD and the Scottish Futures Trust. People have raised concerns about the secrecy around some of those contracts. There are extremely serious issues around the future of funding for Government contracts, and we need transparency.

Research that has been published has also revealed that one third of Scotland’s economy is owned by overseas companies. That figure is 10 per cent higher than when the SNP first took office, in 2007. We believe that we should make better use of procurement powers to secure the Scottish supply chain with well-paid, secure jobs that minimise the risk of wider economic shocks or collapse.

That is why, in this debate, Labour has set out a plan for doing things differently. Public contracts should be awarded only to organisations that meet a minimum standard. There should be no blacklisters and no zero-hours contracts, and companies should have commitments to tackling gender segregation, to the living wage and to trade union recognition.

In conclusion, Presiding Officer, Labour has announced our commitment to enter into no further PFI contracts—

Wind up now, Ms Lennon.

—and to use that money instead to invest in services. We believe that we can do public procurement differently, more effectively and fairly, and I am proud to support the motion in Jackie Baillie’s name.

16:01  

Ahead of today’s debate, members were all sent a briefing on behalf of Unison entitled “Procurement”. The email contains a fairly brief paragraph that surmises:

“It is hardly controversial to say that public money should be spent for public good. We should always be aiming to get ... best value. This isn’t simply a matter of ensuring a high quality service but of delivering social value at every point.”

I do not think that any MSP could disagree.

The briefing goes on to describe the Scottish Government’s overall approach as “disappointing”. There is a hyperlink attached. I encourage members to click on said hyperlink, if they have not already done so, where they will find a far more detailed briefing on the issues surrounding procurement, which is dated April 2016. Twenty-three months ago, Barack Obama was still the President of America and David Cameron was Prime Minister. A lot can change in two years, believe you me.

Although it is disappointing that Unison has not updated its parliamentary briefing on procurement to reflect the times, it is even more disappointing that Scottish Labour appears to have drafted its motion in a similar time vortex, as it contains not one mention of the potential impact that Brexit could have on procurement and services. We know that the issue is of particular importance, because on Friday it was confirmed by the Cabinet Office that

“The regime provided by the EU procurement Directives, covering public procurement contracts for supplies, services, works and concessions above certain financial thresholds, awarded by the public sector and by utilities operating in the energy, water, transport and postal services sectors”

would be affected. I digress.

Today’s motion also comments on the use of procurement by the wider public sector. At almost exactly this time last year, I spoke in another Labour Party debate, which focused on education. In 2017, I spoke about my experiences working for the then Labour-controlled Fife Council and about how I, as a middle manager in a school, was driven to purchase school materials from predetermined providers, even though they were available more cheaply elsewhere. I spoke about my discussions with headteachers in my capacity as a constituency MSP and the number of them I had met who had been forced to pay Fife Council—their employer—£3,000 just to paint a classroom. Even though those headteachers knew that they could have the painting work done more cheaply through a local company, because of Fife Council’s procurement practices, they were not allowed to do so.

Will the member give way?

No, thank you. I would like to make progress.

Another headteacher in my constituency told me that she had to use her school budget to pay for her entire school to be linked up to wi-fi, whereas in new schools across Fife, wi-fi is provided free of charge and her counterparts do not have the cost deducted from their school budgets.

I do not want to be the former schoolteacher who only moans about the price of jotters, so let us turn our attention to another matter that is presently devolved—healthcare. The Parliament’s Health and Sport Committee is currently carrying out an inquiry into the impact of leaving the European Union on health and social care in Scotland.

Will the member take an intervention?

I would like to continue, please.

While the Labour Party has struggled to solidify its unique approach to the constitutional crisis in which we now find ourselves, the issue of public procurement has been directly highlighted by the submission that our committee received—

Please sit down, Ms Lamont.

—from Community Pharmacy Scotland. Perhaps Brian Whittle should read his committee briefings more carefully in the future, because it observes—

Will the member give way?

I would like to continue. He should do his homework next time.

Community Pharmacy Scotland says:

“Although technically devolved, the process and rules for public procurement of products or services over a set threshold value are set by EU regulation.”

Ah ha! The B-word. Community Pharmacy Scotland goes on to note:

“Scotland ... has little policy freedom to deviate from pan-European arrangements. This is not necessarily a negative, however, as the EU legislation creates a truly level playing field and clear instruction for businesses in all member states, and opens up many more options for local government and public authorities when going through tender processes. It also drives improvement of industry, as feedback on rejected tender applications must be given if requested.”

Imagine that, Presiding Officer. On public procurement, Scotland’s industry has been protected by the EU. I see no proposal in today’s motion to continue that safeguard—

Will the member give way?

No, thank you.

I can therefore presume that the protections that are built into EU legislation, which will disappear when the UK leaves the EU, are not supported by the Scottish Labour Party.

Community Pharmacy Scotland also states:

“The concern that Brexit will bring is that a deviation from EU procurement rules could unfairly advantage or disadvantage a given business, and may make the UK a less attractive place to apply for contracts—this would even be the case for each of the home nations if a common framework agreement is not pursued ... Any deviation from EU procurement law which would allow more aggressive bargaining by public bodies could accelerate any decisions such as this and would have many unintended consequences including employment and R&D loss.”

The Conservative Party is intent on rolling back the clock on the devolution settlement. As a result, public procurement is now up for grabs. This is not the first time that a Conservative-led Government has attempted to undermine the very principles of devolution. We know that because, speaking last year, Wendy Alexander confirmed as much. Ahead of the 20th anniversary of devolution, she said:

“It was a battle because many Whitehall departments were highly sceptical of whether it made sense to devolve back to Scotland areas that they had hitherto been in charge of. So there was a huge amount of official scepticism about whether matters beyond those of education, health and housing should also come to Scotland.”

We moved beyond that scepticism on Friday. As today’s Scottish Government amendment makes clear, sustainable procurement is at threat from the Brexit negotiations, because—make no mistake—devolution itself is at threat.

Labour’s motion talks about providing

“opportunities for businesses and jobs”

but, depressingly and predictably, it makes absolutely no mention of the impact that leaving the European Union could have on those things. When it has the opportunity to debate, the Labour Party shuts the debate down and, instead, drags out something that it first bemoaned back in October 2017. Is that real change? It sounds like the same broken record.

16:07  

I am delighted to be able to participate in this afternoon’s debate. As we have already heard, each year, the Scottish Government spends more than £11 billion on goods and services across the public sector, which is a considerable amount of money that is going into our economy. With such a high level of expenditure, it is incredibly important that we get the best value for money when we put public contracts out to tender.

It is therefore extremely disappointing that the current Scottish Government’s record on public procurement is such a disaster and such a mess. At the moment, the Scottish Government seems to be presiding over one disaster after another. What we want are effective and efficient practices, but that is not what we are getting under the Government’s watch, by any stretch of the imagination. Allocating financial resources to projects and contracts that ultimately fail is simply throwing taxpayers’ money away, and it shows that the Government is not prepared to do what it should do.

The sheer scale of waste is quite simply unacceptable. A prime example of the SNP’s ineptitude is its record on procuring IT systems. The system for delivering common agricultural policy payments ended up being £79 million over budget, and the system for NHS 24, as well as being £55.4 million over budget, was four years late. How can that be effective and efficient?

Moreover, the Scottish Prison Service’s wasting of a staggering £440,000 of taxpayers’ money trying to build a new finance system is a clear example of the problems of procurement across the public sector. The new electronic procurement system was stopped during its pilot phase. It only got as far as its pilot phase before it had to be stopped and cancelled, because the Prison Service could not establish why it had failed.

Sadly, however, those staggering overspends are not limited to IT systems—far from it. The Edinburgh sick kids hospital—[Interruption.]

Excuse me a minute, Mr Stewart. Members on your own front bench as well as those on the front bench opposite are holding conversations across the chamber. We do not disrespect the member who is speaking in that way. Please continue.

The Edinburgh sick kids hospital is another prime example. That project, which was signed off by the then First Minister back in 2008, will cost an extra £100 million, according to Government estimates. It was scheduled to open in 2013, and the best-case scenario is that it might open later this year, which is five years late.

No one can deny that projects of that scale might sometimes go over budget. We understand that. We also acknowledge that no one denies that there might be delays, but under the current Government’s watch, the projects that it has presided over have been appalling. The Government continues to preside over those projects, and ministers are prepared to stick their heads in the sand as if nothing is wrong. The issue is the sheer magnitude of the overspends and the length of the delays. Nobody wants a Government that is managing on a day-to-day basis, but we have a Government that is managing on such a basis right here in Scotland right now. The facts demonstrate that public procurement is yet another area in which the Scottish Government is utterly incompetent.

Unfortunately, those failings are not only the problems of the current public procurement system. All the small and medium-sized firms that are trying to get some of the public contracts are having real difficulties getting into that market. The most recent statistics that were revealed as part of the local government benchmarking framework showed a drop in the percentage of procurement money that is spent at local level and with local companies. We should be doing all that we can to expand and support our local communities and local businesses, but that is not happening when, even though we are spending billions of pounds a year in our own country, as we have already heard, the contracts are not being awarded in Scotland but are going elsewhere and being subcontracted back. That is not effective, nor is it efficient.

Recently, the Cabinet Secretary for Rural Economy and Connectivity said that the Scottish Government could do better on the issue. He acknowledged that there is a problem, but no one else seems to think that there is a major issue here. You all turn up and tell us that we are getting it wrong, or that Labour is getting it wrong, but it is actually you who are getting it wrong. I welcome and acknowledge the fact that the cabinet secretary was prepared to make that statement. Our procurement policies should, wherever possible, aim to increase the participation of small and medium-sized businesses, and they should encourage the use of local suppliers.

We in the Scottish Conservatives are committed to getting procurement right and to stopping the wastage of hundreds of millions of pounds by the Scottish Government.

Will the member give way?

No, I am in my final minute.

When undertaking any procurement process, it is essential that we, as elected representatives, keep the principle of getting the best value for taxpayers at the forefront of our minds. That is what the public and the voters would expect of us in this institution—to do the best that we can for them and their finances and resources—but under this Government I am afraid that it is not happening.

Thank you, Mr Stewart. In your passion and commitment to your speech, you used the word “you”, which means that you were accusing the chair of flaws, and I have none. [Interruption.] Please remember to refer to people in this chamber as “the member”. I sense that there is some scepticism about my claim.

16:13  

I acknowledge our flawless Presiding Officer, as I make my opening comments.

We have heard much about ordinary workers being exploited and given uncertainty or given poor terms and conditions because of certain public procurement procedures and processes. Indeed, that has been much of the Labour proposition this afternoon. It will not surprise anyone who is listening to the debate to find a distinct lack of balance or self-awareness from Labour in making that contention. Let me give two examples, to take a more even-handed approach to the debate.

Let us look at the city of Glasgow and Cordia, which is an arm’s-length external organisation and the council’s care arm. It is to be brought back in house under full democratic control. There is an estimated recurring cost of £2.5 million for bringing it back in house. That is because low-paid—and predominantly female—workers who work with Cordia are on poorer terms and conditions, which were introduced by Labour. It has taken an SNP council in Glasgow to step in to do the right thing and ensure that those women will be paid properly.

That is balance in this debate. Everyone should get their house in order.

Let me give a second example. In Glasgow, someone in the third sector who was contracted by Glasgow City Council to look after the elderly in a care home setting was not necessarily—in fact, they were probably not—paid the living wage. That goes beyond Glasgow. Thanks to £125 million of investment by the SNP Government through integration joint boards, everyone in the residential care sector is now paid the living wage. That is real action in taking forward issues that people have been shouting about today, just to make party political points.

Let us get some balance into the debate. In Glasgow, under Labour, people in contracted-out care provision were on poorer terms and conditions until an SNP intervention. That is a fact. Everyone should get their house in order, and there should be balance in this debate.

I always share Bob Doris’s concern about low-paid female workers. Does he agree that the Scottish Government’s use on a continuous basis of agency workers, most of whom are women and are not on the same terms and conditions as civil servants, should end?

I hope to address that point further on in my speech, if I have time. I have not, of course, spoken about Glasgow’s equal pay scandal, which Labour has sat on for decades.

On a more constructive point—I hope that the rest of my speech is constructive—we got to the stage at which the living wage was paid to care workers by working in partnership with the Convention of Scottish Local Authorities and a negotiated settlement on what the costs would look like. That is real politics delivering benefit. We will get to where we want to be if we work together.

Let us look at some of the things that exist and have helped. The Public Contracts (Scotland) Regulations 2015 seek to ensure that blacklisted companies are excluded from public contracts. I note Mr Findlay’s concerns and will return to them. I also note that collaborative procurement, as set out in the Scottish Government’s strategy on contracts and frameworks, has a buying power of £800 million every year. In the eight years that it has been in existence, it has delivered £615 million of savings to the public sector. That is a success for public procurement.

On the successes of public procurement and amending the use of PFI, in the past financial year, the Scottish Futures Trust has saved £138 million for the public purse. Had we used PFI rather than the SFT—if the SNP Government had used the model preferred by Labour when it was in power—that would have cost an extra £6.7 billion. Those are SNP Government procurement successes.

I want to focus on the Procurement Reform (Scotland) Act 2014. Members will debate how successful that act has or has not been, but it was introduced by an SNP Government with a legislative requirement for a procurement report card. The first procurement report card will cover the timespan from January 2017 to March 2018. The Scottish Government has to assess where the procurement successes and weaknesses have been.

On the concerns that I have heard this afternoon, the Scottish Government has implemented a legislative process to tackle some of those issues. Let us use that process, wait to see what the report card looks like, and try to work together with a degree of consensus to build on that.

Mr Neil made important points about things that could be improved. Mr Findlay raised points relating to his on-going concerns about blacklisting, and Ms Baillie raised some of her concerns. There has been much good work and progress on procurement. Nobody is perfect, including the Labour Party—that has been clear in the debate—but let us come together as a Parliament to try to improve public procurement for everyone in Scotland.

16:19  

I speak in support of Jackie Baillie’s motion. In doing so, I will draw on examples from Fife, where the procurement of services through a market approach is not working.

I am sure that many would question the role of the market in providing health and social care in our communities. I draw Parliament’s attention to Fife health and social care partnership’s decision that it will tender for palliative care as part of a larger contract to provide social care in Fife. The end-of-life service is currently delivered by Marie Curie, which informed me last week that it had reluctantly taken the decision not to tender for the contract and would no longer provide its services to families beyond the end of May this year. Although Marie Curie says that it supports Fife health and social care partnership’s quoted objective, which is

“to ensure that individuals have access to support that aspires to the highest level of quality and promotes the right of each individual to direct their own support”,

it does not believe that that can be delivered. It said:

“With the maximum hourly rates quoted, and no margin for extending these, we do not believe appropriate levels of quality care can be provided to achieve these objectives.

The rates quoted would not allow Marie Curie to retain a sustainable, highly trained and experienced workforce that could deliver on the ambition of the tender objective.

The level of risk transferred to us in terms of the financial structure, rates and payment does not align with the delivery and performance requirements of a specialist health provision.”

Is that really how the Scottish Government wants end-of-life care to be organised and delivered? I sincerely hope not.

However, the problem is not just in the care sector. I will now focus on further education. In October 2014, the then finance minister announced £140 million of investment to enable Forth Valley College and Fife College to build new campuses in Falkirk and Dunfermline. The Falkirk campus is going ahead, but Fife College has been told that it is not getting the money. Two weeks ago, its principal told staff in a letter that the Deputy First Minister is now encouraging the college to explore a private finance schools hub option with Fife Council, which would include two high schools alongside the college. The principal stated in his letter to staff:

“Following further careful consideration of the private finance hub option, including constructive discussions with Fife Council and the Government agencies, I wrote to the Chief Executive of the SFC on 29 November setting out the College’s concerns over the private finance schools hub option.”

Those concerns included whether the procurement route is legally competent, with the potential for it to be subject to legal challenge; the requirement for complex and costly legal and governance arrangements to be put in place; a very real risk of a loss of direct control of its main campus by the college, which would compromise its ability to deliver its strategy; the potential that investment that has already been made in the existing project—some £2.5 million—will have to be written off; and the significantly higher overall cost of the private finance investment versus public investment.

The principal went on to explain that, on 12 December 2017, the chair wrote to the Deputy First Minister to reinforce the college’s concerns about the hub private finance route. On 9 January 2018, the Deputy First Minister responded to the chair and stated that his officials and Scottish Further and Higher Education Funding Council officials would be in touch with the college to address its concerns about the private finance hub model. He stated:

“Some three months later, we have not received a formal response from the SFC/Scottish Government to our concerns.”

I have to ask myself whether that is really how we are trying to fund investment in the future of our country. Is that the only way that we can build for the future in further education? That approach is failing Dunfermline, failing Fife and failing to build for Scotland’s future.

We should not let the SNP fool us. Its method of financing construction projects is a variation of public-private partnerships, but private financing now costs more than borrowing through the Public Works Loan Board—indeed, it costs double. That is why we need an independent root-and-branch review now of how public procurement is operating in Scotland, including the Scottish Futures Trust.

I call Tom Mason, to be followed by Angus MacDonald, who will be the last speaker in the open debate. That is fair warning.

16:25  

Public procurement is an issue that should showcase the attitudes that we have when spending the money that is taken through taxation.

To its credit, the motion recognises that one of the prime concerns—if not the prime concern—should be to provide value for money for taxpayers. Unfortunately, the Scottish Government has not got close to fulfilling such an objective. There is a catalogue of waste going back years, with hundreds of millions of pounds taken from vital public services.

One need only glance at the SNP’s record to realise how far it is from providing value for money. Its record includes an IT system for farm payments that is £79 million over budget; an NHS 24 IT system that is £55 million over budget and four years late; Edinburgh sick kids hospital, which is £100 million over initial estimates and five years late; and motorway improvements that are going over their initial budget by £165 million.

Project after project is spiralling over budget. Think how much healthier our national finances would be if we had a Government that was capable of adequate long-term financial planning. There is of course a silver lining for the Government here—it is the fact that I have only six minutes to relay all the problems that we have. The difference is clear even in passing—the only party that will deliver value for money for taxpayers is the Scottish Conservatives.

Will the member give way on that specific point?

We would scrutinise—

Sit down, Mr Arthur.

—all local authority spending choices to ensure optimum value. In areas where the SNP has failed to spend carefully enough, such as the NHS, farming and prisons, we would cut the waste and stop throwing away money that has been provided to the Government by the hard-working people of Scotland.

It would appear from the text of the motion that Labour wishes to use public procurement to protect Scottish industry. I am all for boosting our economy and creating better, high-paying jobs here at home, but that can be a slippery slope if it is not done properly. There should be a place in our supply chain for companies based outwith Scotland. Forcing public contracts to use Scotland-based businesses might not always be as efficient as using other sources, so it is worth having other options available.

Does the member agree with his colleague Mr Whittle that we should be paying more to buy Scottish chickens rather than Thai chickens? Would that be value for money?

I am yet to understand why we would need to go to Thailand to buy chickens, but that point needs careful consideration. It comes down to value for money, which covers a broader spectrum than just the cheapest price.

I would welcome a debate on how best to equip Scottish industry so that it can challenge for contracts without Government intervention. A key element of that is small and medium-sized enterprises. It has been noted that, over the past five years, local authority spending on SMEs has dropped, which should be deeply concerning to members across the chamber. I echo the comments by my Conservative colleagues that we should be aiming for better results here, with policy that aims to increase SME participation in the procurement process.

The motion also refers to the Scottish Futures Trust. Indeed, in that respect I noted a few similarities in Jackie Baillie’s speech with the one that she delivered at the Labour Party conference at the weekend. I cannot be alone in finding it somewhat curious that Labour is calling for an urgent review of something that Audit Scotland is due to review later this very year. I happen to trust the ability and the opinions of Audit Scotland. We should let it get on with it and work in the best way it sees fit.

I have—quite rightly—listened intently to speech after speech from Conservative members arguing that procurement is not working and it could be improved. Given the Cuthberts’ report from last August, the live cases and the fact that the Conservatives share our ambition to expand SME-based procurement, does the member not consider that the best way to do that would be to support a review and our motion this evening?

Audit Scotland is doing a review. We should just let it get on with it and wait to see its result. We do not want any additional reviews. After all, Audit Scotland is the expert body.

It is with that in mind that I urge colleagues to support Jamie Halcro Johnston’s amendment today. Our choices in public spending reflect the attitude of those making those choices. When Government wastes money, it shows contempt for the people who work hard, pay their taxes and provide income for the state to spend. Recently, there has been too much waste, which I find offensive.

Undoubtedly, we can make improvements to how we go about public sector procurement. That should be done in a balanced and responsible way that provides high-quality public services and value for money for the taxpayer. If those Scottish Conservative priorities were adopted, they would serve Scotland well.

16:31  

I am quite pleased that Labour has brought the debate to the chamber this afternoon, not least because I can highlight good-news stories about successful procurement from my constituency, such as the four NPD high schools that were delivered by the SNP administration of which I was proud to be a member.

Before I touch on the success stories, as well as on the disaster that was Labour’s earlier PFI deal for another four high schools in the Falkirk district, I will bring positivity to the debate and highlight the forthcoming good food nation bill, which, I hope, will allow us to set into legislation soon the principle of sourcing our food locally.

Yesterday, I was pleased to receive “Education, Sustain, Promote: The Industry Vision to Produce a Good Food Nation” via NFU Scotland, which has launched the agriculture industry’s vision to produce a good food nation, in conjunction with other industry players, including the Scottish Beef Association, the National Sheep Association Scotland, the British Egg Industry Council and Scottish Quality Crops. The document rightly highlights that, once the UK is no longer a member of the EU, public sector food procurement can do more to source greater volumes of food and drink from within Scotland. It has already been proved that that can be done.

Recent regulations that were enacted in France, which put a requirement on all schools, hospitals, prisons and other state institutions to source at least 40 per cent of their food locally, are expected to shorten food supply chains, stimulate local economies and halve emissions attributed to the agriculture sector, which is an issue close to the Environment, Climate Change and Land Reform Committee’s heart. It is perfectly feasible to introduce a similar target in Scotland that applies to all public bodies, which would demonstrate a clear commitment to Scottish produce, as well as having clear positive effects on sustainability.

Will the member take an intervention?

I am just about to mention Mr Whittle.

The good food nation bill will give us the opportunity to prioritise public sector procurement of food—we just need to seize the opportunity, and I look forward to the support of Brian Whittle’s party when the time comes.

Does the member recognise, as I do, the work that councils such as East Ayrshire Council have done? They are already doing what is being proposed; there is no need for any change in EU regulation to be able to procure locally.

Yes, indeed, and I encourage more local authorities to embrace the good work that is going on in certain local authorities.

It is not just the good food nation bill that presents us with the opportunity to improve our procurement practices, because we will also have a circular economy bill to work on in this session of Parliament, which will safeguard Scotland’s resources. In order to do that, Scottish Government policy makes increasing the supply and demand for circular products and services a key priority. In addition, the Scottish Government’s circular economy strategy recognises the important role of public procurement in supporting a transition to a more circular economy.

To help meet those objectives, Zero Waste Scotland has already developed procurement guidance to support circular economy purchasing decisions and outcomes across the Scottish public sector. Now in circulation, that guidance includes category and commodity guidance across key areas of public sector spend, including catering, construction, electricals, furniture and medical devices. The document sets out the rationale for making purchasing decisions, with product life extension in mind. It is intended to equip procurement professionals, decision makers and budget holders with practical guidance on incorporating the circular economy across the stages of the procurement life cycle. It also provides examples of how other contracting authorities have approached circular procurement, through case study examples.

The member is a regular user of ferry services to his home in the Western Isles. Would he support Labour’s call to use the Teckal exemption to directly award contracts to companies such as the David MacBrayne Group?

I think that there is work under way on that issue, so maybe the member should watch this space. There may be an announcement—or there may not be.

There is no doubt that Scotland’s public sector procures a huge amount of goods, services and capital items. As we have heard, that total cost is £11 billion per year, so there are potentially enormous gains to be made if that substantial sum could be deployed to purchase products and services with good circular credentials.

Presiding Officer, my committee colleagues and I look forward to both of the bills that I mentioned coming to the ECCLR Committee over the remaining months and years of this session and hope that we can all seize the opportunity to move sustainable procurement in Scotland forward.

I will quickly turn to the NPD schools in Falkirk district and the differences in approach between that method of funding capital investment and the omnishambles that has turned out to be the legacy of Labour’s PFI. There is no doubt that the PFI contract in Falkirk was controversial when it was introduced. Five schools were built: Braes high school, Bo’ness academy, Carrongrange special school, Graeme high school and Larbert high school. According to the numbers, the initial capital investment cost of those five schools was in the region of £65 million. However, when we look at the legacy, under PFI those schools are tied into a 26-year contract. The average unitary cost to Falkirk Council each year is £12.05 million, and the total payable over the 26-year period is well in excess of £300 million. It was one of the first PFI deals in Scotland and, frankly, it is one of the worst.

We move to closing speeches.

16:37  

I am pleased to close the debate on behalf of the Scottish Conservatives. I put on record my thanks to the organisations that provided helpful briefings for the debate. It does not feel like we have really got much out of the debate, apart from Angus MacDonald leaking the Government’s plans on future ferry policy, which is very welcome. However, the debate is extremely important. We have heard that the procurement of goods, services and construction projects by the Scottish Government and the wider public sector is a massive and integral part of our nation’s economy. It underpins a huge number of local and national contracts and businesses, which are associated with jobs across our communities the length and breadth of Scotland.

Jamie Halcro Johnston rightly highlighted the absolute importance of some of the key principles that should be woven into our procurement policies. Namely, they should provide value for money for the taxpayer, they should ensure that good employment practices are followed for all employees who undertake contracts and they should have a supply chain that is, wherever possible, anchored in Scotland, that encourages locally sourced products and that provides genuine opportunities for local businesses of all sizes on an open and transparent basis, which will encourage them to apply for contracts in the first place. On that latter point, I share the expressed concerns that we have seen a decline in recent years in the percentage of local authority procurement spend that goes to smaller and medium-sized enterprises in Scotland. We need to look at that decline and reverse it.

Brian Whittle focused on food procurement, which is an important area. I commend him for the excellent work that he has done since he was elected to the Parliament to highlight local authority and health board food procurement practices. Given Scotland’s international reputation for having the highest-quality food and drink in our world-class food sector as well as the highest welfare standards, Brian Whittle was right to question why our public services are spending millions of pounds on imported foods. The Scottish Government has been talking about that for years, but we need to move forward now.

I understand the point that Miles Briggs is making. He will know that it has been announced today that there are record exports of £6.1 billion-worth of food and drink from Scotland. Is he proposing that the Scottish Government should tell local authorities to do that, or does he have some other process in mind by which it could be achieved?

If we are looking towards Scotland being a good food nation, it is important that we use that food here in our nation as well. I welcome those export figures, but it is clear that the supply of food to our public sector has been going backwards under the Government’s watch. That needs to be considered in relation to all public procurement contracts.

The number of members who have highlighted problems with projects in their constituencies and regions as a result of that type of contract being negotiated has been striking. Alexander Stewart really brought home the issue in relation to the Scottish Government’s record on the procurement of complex IT projects, such as those in the prison service and the NHS, and in administering CAP payments, on which there is a particularly poor record, as everyone across the chamber knows.

We have also heard a number of concerns about NHS projects, such as concerns about the cost of car parking at hospitals across Scotland. Here in my Lothian region, I have repeatedly spoken out about the lack of car parking spaces at the royal infirmary of Edinburgh and the huge waiting list for staff parking permits there, which is hitting staff members incredibly hard. Some junior nurses and doctors have told me that they are even considering applying for jobs elsewhere, as the cost of having to pay for parking at the RIE is eating into their take-home pay. The Scottish Government really needs to look at that, especially here in Edinburgh. Fundamentals such as the ability of key public servants, such as nurses and doctors, to park at their place of employment without facing unreasonable costs surely need to be embedded in procurement and in the negotiation of contracts.

Another issue that I would like to hear more about from ministers is how we can improve and promote regional procurement, through which, for example, a number of health boards or local authorities pool resources and construct regional centres to provide better value for money. Health ministers have already indicated to me that they expect NHS health boards to work to plan new and future NHS investments regionally, and I support that approach. However, it is clear that we need more progress and clear frameworks for how that will actually be achieved.

One important example for me is the Edinburgh and south-east of Scotland cancer centre at Edinburgh’s Western general hospital. I have raised questions on that in Parliament, and £26 million has been allocated to address some of the concerns with the current state of that building. NHS Lothian is developing a business case for a new world-class cancer centre, but we need to see how that will be taken forward on a regional basis. That gets exactly to the point that the cabinet secretary made regarding transparency. It is important that the Scottish Government and health boards move towards a regional approach to planning and funding new developments for our NHS, but we need to be able to see how that is spent and how taxpayer value for money will always be achieved.

One of the best speeches that we have heard today was that from Alex Neil. Brexit hangs over the debate in terms of how we will move forward as a country in the future, and all of us will have to acknowledge that at some point. As Alex Neil said in the chamber yesterday, and as others on the SNP benches may be saying, there could be opportunities from Brexit. I never voted for Brexit, but we must respect the decision taken by voters across the United Kingdom to leave the European Union. I hope that the Scottish Government will eventually come round to recognising that we can deliver a stronger Scotland post-Brexit and will consider how we deliver that but, if it is only Alex Neil, I welcome that.

I support the amendment in the name of my colleague Jamie Halcro Johnston, which rightly highlights the role that good procurement plays in minimising wasteful spending. I welcome the debate and the focus that it has brought to this important subject.

I call Keith Brown to close for the Government.

16:43  

Despite the fact that the debate has been relatively heated and contentious at points, there is actually a substantial degree of consensus between the parties, not least on how procurement can help to deliver the ambitions that we may have for an inclusive society and for benefits from economic prosperity. The Scottish model of procurement, which is recognised internationally, takes into account a balance between cost, quality and sustainability. Jamie Halcro Johnston made the point that it is not possible for procurement to satisfy all those things in equal measure. We have to understand that and continually consider ways in which it can be improved.

Rather than repeat things that have been said before, I will try to address some of the points that have been made. A number of speakers, certainly on the SNP benches, made comments about the absolute hypocrisy with which the Labour Party has approached the debate. The Labour Party is the party of PFI, above all else, and it is the party that failed to take action on blacklisting, although it knew all about it. One of the excuses was that Labour did not understand how significant that issue was. However, Maria Fyfe tried to take a bill on that through the House of Commons in 1988, so Labour knew about the issue then but, despite that, it did not take action during the 13 years that it was in government from 1997 to 2010.

Labour is also the party that is determined to leave employment law to the Conservatives. Labour’s submission to the Smith commission said that it was critical that employment law should stay at Westminster, in the hands of Conservatives. That, of course, has consequences.

The cabinet secretary and the Scottish Government are responsible for employing agency workers, which is something that he controls. Will he make a commitment to end the scandal that is the misuse of agency workers in Scottish Government employment now?

I have different information from Jackie Baillie on that point—we do not use agency workers in core Scottish Government employment. If Jackie Baillie can provide me with details, I am more than willing to look into the matter but, for core Scottish Government employment, we do not use a Swedish derogation that allows that to happen.

I will go back to my point, which Jackie Baillie will be keen to hear. The Labour Party’s support for leaving control over such things with the Tories means that, in relation to blacklisting and the living wage, we cannot take the action that she says she would like us to.

In all fairness, Jackie Baillie says that all people on public sector contracts should be paid the living wage. The point of difference between the SNP and Labour is that we believe that everybody should be on the living wage, not just people on public sector contracts. Despite the fact that Labour wants the Tories to have the power on the issue, I point out that 94 per cent of all people on Scottish Government contracts are paid the living wage and that a higher proportion of people are paid the living wage in Scotland than in any of the other UK countries.

On a point that was made by Angus MacDonald and, I think, Alex Neil, Labour’s first brush with going into PFI was the Falkirk deal for five schools, which was the biggest PFI deal in the UK at that time. Not only was it extraordinarily expensive and hugely profitable to the companies involved, but at the end of that contract all five schools will revert back to the private sector. The council will have to build another five schools to replace them. That was Labour’s attempt at PFI, and that is why we will not take lectures from Labour on PFI.

Jenny Gilruth made an important point that has not received much attention in the debate, although it should have done, because it was about the extent of the procurement power grab from the UK Government. The implications of that are absolutely extraordinary. I would have thought that Labour would be concerned about those implications, because of the potential for attack on working conditions and the terms and conditions offered by employers for public sector contracts. If the UK Government gets that power, as Labour believes it will, and starts to attack the working conditions of people involved in those contracts, it will be those people who will pay for that. I would have thought that the Labour Party would have a bit more to say about that.

Talking about Labour initiatives, it was Labour that pushed for the Teckal exemption in the direct award of ferry contracts to public sector companies. It was Labour that got the advice from the European Commission. What is the Government view on the Teckal exemption?

It has already been acknowledged that that work is now being taken forward. If David Stewart is saying that we should have done that right away, why did Labour not do it? Labour looked at it and decided not to do it, so I ask the member please to have a bit of self-awareness.

At least we have had some positive suggestions. One was from Alex Neil, in relation to what he called a national house-building agency.

Will the member take an intervention?

No.

We have had other suggestions. For example, a Scottish national infrastructure company was suggested. I am not saying that we are going to do those things, but they are worth looking at.

Jamie Halcro Johnston asked how we can use the system to try to improve access for SMEs. I agree with that idea. Given the consequences of the collapse of Carillion, many of which we do not have control over, such as those relating to pensions, reporting and company law, it is fair to ask how we can involve SMEs. We have tried to do that on previous occasions. Some of those who criticise the Procurement Reform (Scotland) Act 2014 voted for that act so, again, there is a lack of self-awareness. If we can improve things, we should do so, and a review is under way to ensure that that happens.

Derek Mackay mentioned the procurement strategy. Under the 2014 act, bodies are required to produce annual reports, which will happen shortly. Those will be used to prepare the Scottish ministers’ overview report of procurement activity throughout Scotland, which we aim to publish by the end of the coming financial year.

Will the cabinet secretary take an intervention?

The cabinet secretary is in his last minute. Please sit down, Mr Briggs.

I apologise to Mr Briggs—perhaps next time.

The report of procurement activity that we aim to publish by the end of the coming financial year should allow us to look at the consequences of the procurement strategy and ways in which we can improve things.

We are confident that we have a positive story to tell and we are proud of the progress that we have made in recent years to reform public procurement. To return to Jenny Gilruth’s point, that is why the UK Government’s shameless attempt, under the guise of Brexit, to grab the power from this Parliament to regulate public procurement should concern everyone in this Parliament. As well as being an affront to the principles of devolution, it threatens to undermine all the positive measures that we have sought to implement in procurement.

In the UK, it is only Scotland that requires a byelaw that any decision to award a contract is based not solely on price but also on quality; it is only Scotland that requires a byelaw that companies that engage in blacklisting should be excluded from procurement procedures; and it is only Scotland that requires a byelaw that public bodies must consider community benefit requirements in major contracts. The people of Scotland deserve better than to have public procurement returned to Westminster control, so I ask for support for the amendment in the name of Derek Mackay.

I have to protect the time for Labour, because this is Labour’s debate. I call Lewis Macdonald to close for Labour. You have until 5 o’clock.

16:51  

We have made the case today for a change in public procurement policy, and contributions from around the chamber, particularly those that focused on the choices that face ministers today, seem to have vindicated Labour’s approach. The contributions from Andy Wightman and Willie Rennie were welcome; so, too, was Alex Neil’s call for a review of framework agreements. Tom Arthur helpfully read out Labour’s objectives for procurement policy and agreed with everything except the need for a review. Perhaps he can explain to John Mason why a supply chain anchored in Scotland is a policy supported by parties throughout the chamber and not an alternative to an open economy.

I am sorry that Angus MacDonald, having started so well, seemed eventually to be uncertain about the future procurement of ferry services. I could almost see his hopes of a Government-inspired question being holed below the waterline before he sat down.

Conservative and SNP members have had different priorities this afternoon, but their amendments have united around one thing. Both parties have said that they will resist Labour’s proposals for an urgent review of public procurement policy, employment practices, public sector contracts and the Scottish Futures Trust, although some Tories at least recognised the case for change.

Perhaps our review proposals will have to wait for another day, if Tory and SNP MSPs do indeed unite to vote them down, but the case that we have made will have to be answered sooner or later—for thousands of people working on government contracts in Scotland, the sooner the better. It does not matter much to those workers whether the contract that they are on is designed in Whitehall, on the authority of Tory ministers, or designed by Keith Brown and Derek Mackay in St Andrew’s house. What matters is whether the rights and conditions of employment of those workers are protected and whether their jobs are secure. The continuing prevalence of zero-hours contracts, of employers failing to pay the living wage and of umbrella companies ripping off workers is not acceptable anywhere, least of all on public contracts. Those practices must change. The Government has said that it does not want a comprehensive review and sees no need to do anything urgently. It promises instead to report on its own legislation a year from now—a business-as-usual approach.

Keith Brown made a point about sustainable procurement and the threat that is posed by Brexit. There are, of course, issues that need to be addressed about continuity across the whole range of policy. However, the truth is that for 11 years the SNP has had responsibility for procurement policy. Responsibility for the decisions that the SNP has made lies with the SNP, because it has been in government for that period and cannot, at this stage, put the blame for shortcomings on anyone else.

SNP members—front bench and back bench—have suggested that it is enough to set out guidelines and aspirations, but the truth is that fine words about fair work do not deliver for workers such as those whom we have heard about today. Keith Brown says that 94 per cent of workers are on the living wage; he also has responsibility for the other 6 per cent of workers on Government contracts and he needs to take action on those, too.

Does Lewis Macdonald at least acknowledge that we could deal with the other 6 per cent if we had the legal powers that Labour wanted to refuse us? Is he willing to correct the record in relation to Jackie Baillie’s earlier comment that the new social security agency staff would be agency staff? That is absolutely not the case. The intention is that they will be core Scottish Government staff.

I hope that Keith Brown’s last claim is proven to be true, but the agency worker who was quoted by Jackie Baillie was told directly by her agency that it was recruiting for the new social security agency. Of course, if today’s debate has achieved nothing else, if we can bring an end to agency work in Scottish Government departments and agencies, that will be a big step in the right direction.

There have been plenty other examples across a whole range of projects, and many of the issues are exemplified by the largest road construction project in Britain today—the Aberdeen western peripheral route. Of course, it is now more than 15 years since a Labour-led Scottish Government committed to building the AWPR; that is a long time to take to build a road, and it is little wonder that those who hope to travel on it are impatient to see it finished.

However, because of the model that was adopted by the SNP, it will also take a long time to pay for the AWPR, and it will cost a lot of money to do so. The Scottish Government’s figures from January make clear that the burden of unitary payment charges will be with us for the next 30 years, working out at nearly £1 million a week for the Scottish taxpayers of the 2040s, many of whom have not been born yet. The cost will reach a total of £1.45 billion over those 30 years, compared with a capital value funded by those unitary charges of £469 million—nearly £1 billion in payments, then, over and above the actual value of what is being built.

The wording of the motion does not necessarily match what the Labour Party said at the weekend. Is the Labour Party now saying that it will not support any further revenue finance projects in Scotland and that it will oppose new-build projects and projects that support our community and transport infrastructure?

The Labour Party is saying clearly to the Government today that the time has come for a root-and-branch review of public procurement. There is an opportunity for Derek Mackay to vote for Labour’s motion to allow that to happen and then that root-and-branch review can seriously examine all our options.

The truth is that it is not just the cost of public-private partnerships such as that of the AWPR that we need to focus on. Other issues have been exposed with the AWPR and elsewhere. The collapse of Carillion has exposed many aspects of contracting company culture to public view in a way that has not happened before. Here were company executives changing their own rules so that their bonuses could not be clawed back if the company failed; here was a multimillion pound business where revenues fell so far short of commitments that there was not enough cash left at the end even to pay to put the business into administration.

More than that, we got an insight into a culture among companies where such behaviours were clearly not unique; that is a good reason for the Government to think again about the public sector’s relationships with contractor companies and to consider what should be put in place in the future.

Of course, we recognise that there are many good companies in that sector of the economy. There are many companies whose practices are right; there are employers who train apprentices and do it well; and there are employers who employ workers directly rather than through the type of employment agencies that charge workers for collecting their own wages, who pay the rate for the job and always pay the living wage, and who recognise trade unions rather than blacklisting them. We want to ensure—and the purpose of today’s debate is to ensure—that in the future, the Scottish Government awards public contracts to those types of company and not to businesses that are only interested in short-term profits, whatever the long-term costs. That is why we are calling for an independent review.

To look at some of the immediate opportunities that the Government now has, I turn again to the example of the AWPR. The failure of Carillion has left two other partners in the Aberdeen Roads Consortium—Balfour Beatty and Galliford Try. Galliford Try has acknowledged that the additional funding obligations arising from the contract will force it to raise an additional £150 million. Balfour Beatty has not acknowledged anything of the sort—at least not in public. What is has done instead is to continue to bid, and its bid for the next available roads contract at the Haudagain junction in Aberdeen was announced by Transport Scotland just yesterday. At the same time, the same company is telling local staff in another part of its business that they are to lose their jobs. The electricity sub-station design team at Kintore, which works across the Scottish electricity network, is due for closure, and if that happens, those jobs will be offshored outwith Scotland. A company like that ought to be in a position to sit down with its workforce and their trade union and talk about a way forward.

I was glad last week when the First Minister agreed to talk to Balfour Beatty about the threat to jobs. That conversation needs to be robust. A contractor company that wants to work on public sector contracts on Scotland’s roads network is proposing to offshore jobs in Scotland’s energy network. It is bidding, Carillion-style, for one more contract, to make up for losses on the previous one, while making its directly employed staff redundant. Surely companies cannot be allowed to benefit from Scottish public sector contracts while taking no responsibility for the wider Scottish economy or fair employment practices.

That is one more reason why the time has come for a radical change in Scottish public procurement and a root-and-branch review.