Wednesday 15 June 2022
My Lords, it is now 4.15 pm. As is customary on these occasions, in the unlikely event of there being a Division in the Chamber while we are sitting, this Committee will adjourn as soon as the Division Bells are rung and resume after 10 minutes.
Goods Vehicles (Licensing of Operators) (Amendment) (No. 2) Regulations 2022
Considered in Grand Committee
My Lords, on 9 March 2022, your Lordships’ House debated the Goods Vehicles (Licensing of Operators) (Amendment) Regulations 2022, which govern the goods vehicle operator licensing regimes in both Great Britain and Northern Ireland. The regulations came into effect on 17 March. During the debate on 9 March, I explained that an error in transcribing our policy intent into legislation would mean that a second debate might be necessary on an instrument to make the necessary correction. This is that debate.
First, I would of course like to apologise to noble Lords for taking up valuable parliamentary time with this correction to a previously laid and debated instrument. The reason for the correcting instrument is that the original instrument went beyond the policy intentions. The intent was that the regulations should apply only to the operation of goods vehicles. However, one provision unintentionally also applied to the operation of passenger vehicles; in doing so, it disrupted the Public Passenger Vehicles Act 1981, which has made the regulation of passenger vehicles slightly more complicated. While the traffic commissioners have been able to continue their important work, this added complication is not tenable in the long term. The Committee will know how disappointed I am that an error has occurred, and I assure all noble Lords that the causes are being addressed within the department, as a wider review into SI processes is now under way.
To touch in a bit more detail on the real-world consequences of what has happened, the error in question was in Regulation 7 of the original instrument. In being drafted as it was, Regulation 7 incorrectly applied certain provisions to road passenger transport operations. The effect of the error, applying these provisions to all transport managers of certain road goods vehicle operations and road passenger transport operations, was not the original policy intention.
Essentially, the effect of the gap was that the regulators, which in Great Britain are the traffic commissioners, have used other options. They are using case law rather than legislation to minimise the gap, but of course we think that legislation should be put in place. We had originally hoped to lay this as a negative instrument. Indeed, we did so, but it was upgraded by the sifting committee, which is why noble Lords are having the debate today.
I turn to the practical effect of whom this impacts. It relates to those transport managers within the public service vehicles jurisdiction, either those already on licences who are subject to regulatory intervention—because they have not done something correctly—or those who seek to be nominated as transport managers. Looking back at the numbers in previous years, for example, in 2019-20, around 19 transport managers would have been affected by such actions, so it is not a great number. The traffic commissioners have been able to cope and have taken particular care in communicating their decisions during this quite short gap period of just over three months. Their hard work is very much appreciated, so I commend these regulations to the Committee.
My Lords, I thank the Minister. I had a sense of déjà vu when I saw this instrument on the list for today. To be honest, it is tedious enough that we have to go through the vast list of SIs as part of the replication of EU regulatory structure without having to deal with errors, although it is not surprising that there are errors. One can hardly process the amount of legislation that we have been dealing with for the last couple of years without the occasional error creeping in. I was horrified today to read that Jacob Rees-Mogg has a plan for us to go through all 2,000-plus pieces of EU legislation within the next two years to re-examine them.
May I cut to the core of the issue? The Minister has explained that road transport operators were mistakenly included in the original SI alongside goods operators. One of my questions was going to be about the impact on the traffic commissioners’ powers, but the Minister has explained that. She has also explained clearly the number of cases involved.
My other question is, to go back to the original SI, why are passenger vehicle operators excluded? Why do they not need transport managers in the way that goods vehicles and their fleets need them? Is there separate legislation that covers passenger transport operators or is it that, for some reason, they are not regarded as in need of managers in the same way? Other than that, I am delighted to see that this error has now been corrected and it should, I hope, be fully operational and effective.
My Lords, I welcome the introduction of this SI to amend the errors in the previous regulations approved by this House in March. As the logistics sector experiences an unnecessarily difficult time, it is disappointing that even the initial piece of secondary legislation has problems. There is an important point here in that the Government previously claimed errors in the initial drafting would be rectified through the negative procedure, which clearly has not been the case.
Three months later, the House is finally to approve a technical instrument to right the wrongs of the previous legislation. I hope this will bring this specific matter to a close, though unfortunately it will not solve the chaos that is still plaguing British business. Weeks away from the summer holidays, the Government must bring forward a plan to fix the crisis and bring much-needed certainty.
I am grateful to both noble Lords who took part in this short debate and will answer the issues they raised. The noble Baroness, Lady Randerson, asked about passenger vehicle operatives needing transport managers. They do need transport managers and always have done. If the noble Baroness recalls, the issue we were discussing here was the extension of the requirement to have transport managers to much smaller vehicles. It was basically down to vans between 2.5 tonnes and 3.5 tonnes, I think. It was only because it was a requirement of the TCA that we matched what the EU was doing in that area, but the passenger service vehicles require transport managers now and always have done, so there is no change for them.
On the point about procedure raised by the noble Lord, Lord Tunnicliffe, I sincerely wish this had been done by the negative procedure; I feel that we could have got away with it but the sifting committee did not agree, which is why we are before the Committee today. As he knows—we had a debate around it the other day—the Government are very focused on what might happen in the summer in terms of challenges to road traffic in Kent. We are working closely with the Kent Resilience Forum and will continue to do so.
Hovercraft (Application of Enactments) and Merchant Shipping (Prevention of Pollution) (Law of the Sea Convention) Amendment Order 2022
Considered in Grand Committee
My Lords, this order amends two distinct instruments to give the Government powers in two areas: first, to apply pollution prevention requirements in the International Convention on Standards of Training, Certification and Watchkeeping for Seafarers, which I will refer to as the STCW convention, to hovercraft; and, secondly, to provide strengthened enforcement powers for breaches of requirements by all ships, including hovercraft, relating to the prevention of pollution. These powers must be contained in an Order in Council because the Merchant Shipping Act 1995 and the Hovercraft Act 1968 require it.
This order has no impact in itself on the only commercial hovercraft route in the UK—Southsea to Isle of Wight—in respect of which there is one operator and two hovercraft, operating in inland waters. In addition, there is no impact because this order simply creates powers to make secondary legislation. These powers are needed as a result of the repeal of Section 2(2) of the European Communities Act 1972, following the UK’s exit from the European Union, which provided the powers for the pollution prevention requirements in the regulations that currently implement the STCW convention. The repeal of Section 2(2) means that such provision relating to hovercraft cannot be made, or existing provision remade.
The STCW convention sets the standards required for seafarers to obtain the internationally recognised certificates required for seafarers to work on vessels that operate internationally. The convention has been subject to a number of recent amendments affecting seafarer training; these amendments are intended to be implemented in regulations, replacing existing regulations that implemented the STCW convention. Criminal sanctions relating to breaches apply to shipowners, operators and masters who fail to ensure that their seafarers are qualified, certified and discharge their obligations in accordance with the convention requirements, including the latest amendments to the STCW convention. Although these amendments do not affect hovercraft, other provisions of the STCW convention, such as manning, watchkeeping and the requirements to ensure that seafarers are trained and certified in accordance with the convention, will continue to be applied to hovercraft and will be contained in the new replacement regulations.
In the absence of Section 2(2), the current powers to provide for criminal sanctions for a breach of STCW training and manning requirements relating to the prevention of pollution do not include custodial penalties. This contrasts with the criminal sanctions available for breaches of safety requirements, which include custodial sentences of up to two years. It is therefore necessary to have the same provision available for contravention of the pollution prevention requirements in the new regulations implementing the STCW convention, as the training and manning requirements in the convention relate to both safety and prevention of pollution. Without the powers created by this order, the recent amendments to the STCW convention cannot be adequately enforced in UK law, and existing provision for custodial penalties and hovercraft cannot be remade. This order provides those powers.
In even more detail, this order will ensure that the pollution prevention obligations in the United Nations Convention on the Law of the Sea, known most commonly as UNCLOS, can be applied in full to hovercraft in the same way that they apply to ships. It also applies other up-to-date pollution prevention-enabling powers in the Merchant Shipping Act 1995 to hovercraft. This means that UK regulations governing hovercraft can include provision for pollution prevention that derives from UNCLOS. This order also enables manning requirements in Section 47 of the Merchant Shipping Act 1995, which apply to ships, to be applied to hovercraft. Finally, this order makes discrete amendments to the order enabling the implementation of the pollution prevention obligations in UNCLOS. The UNCLOS order needs to be updated so that regulations made under it can prescribe custodial sentences in respect of offences for breaches of requirements in those regulations.
I have highlighted the importance of this draft Order in Council so that, in the absence of Section 2(2) of the ECA, we can, first, continue to apply pollution prevention provision in the STCW convention to hovercraft and, secondly, impose custodial penalties in relation to all ships in so far as they relate to prevention of pollution. I look forward to contributions from noble Lords.
My Lords, I have no comment to make on the hovercraft provisions but should like to raise two points. I am concerned about possible creeping criminalisation for seafarers. A pollution incident could take place due to a fault in a valve, a pipe or some such—work that could have been done by a shipyard or other third party—or something for which the crew are arguably not specifically responsible. I want the Minister to be very careful about extending to seafarers in this way criminalisation which might not be appropriate.
The second point is that shipping is a reserved power, but the legislation will generate different actions depending on the registered port of the vessel, so that a vessel registered in Aberdeen would not be liable to action, whereas a vessel registered in Southampton would. It would not matter per se whether the incident happened in the UK or elsewhere in the world, but the provisions in Scotland appear to be different and, if the ship is registered in Scotland, British ships could incur different penalties for a similar offence.
My Lords, I am grateful to the noble Baroness for her introduction of this very interesting SI. My first question is: why now, apart from the fact that Brexit has happened? We have all been travelling on hovercraft for 40 years or more, and one could assume, therefore, that it has been all right to pollute from hovercraft for 40 years without anyone worrying and you need only one person on the bridge because the regulations do not apply to hovercraft. Can the Minister explain why hovercraft are different? There are other types of fast passenger boats around these days—they are probably called “jet boats”, or something like that. I am not sure why a hovercraft is so different, apart from the fact that it gets its lift from air which does not leak out. It is still a craft and therefore obviously still needs to be subject to the pollution regulations and the manning rules.
On manning, is the intention to make rules for hovercraft the same as for any other passenger vessel, where, I think, the rule is that if you do not have more than 12 passengers, you can have one person as the crew, whatever the size of boat? But then there are various rules according to the number of passengers, size of ships, weather conditions and everything else. Hovercraft generally do not operate in bad weather in the way that many ships can. Perhaps the Minister can explain how the manning regulations would be different on a hovercraft from an ordinary ship in the number of crew wanted.
Lastly, I think that, as the Minister said, the only service now in the UK is the one across to the Isle of Wight, but there used to be one across the channel. If that re-emerges in some shape or form—between the UK and France or another EU country—will we get into the same knot as has happened with P&O Ferries with manning and everything else? I hope that will not involve coming back here with some more regulations; I hope it is already covered. I look forward to her answers.
I thank the Minister for her introduction, and the noble Lord, Lord Mountevans, for pointing out that the situation will be different in Scotland. It will also be different in Northern Ireland, so far as I understand it from my reading of the SI.
No, the situation will not be different in Wales; as so often, it is a case of “England and Wales”.
I join the noble Lord, Lord Berkeley, in asking why this is happening at this point. My research suggests that not only is there only one public hovercraft service left in Britain, but there appears to be only one commercial hovercraft service left in the world. If that is the case, hovercraft really are yesterday’s technology. They are even less likely to make a comeback following the huge increases in the price of fuel, because they consume very high amounts of fuel as well as being unreliable as a passenger service, of course, because they are difficult to operate in bad weather—and we get a lot of that in the UK. In modern terms, although hovercraft are exciting and interesting to travel on, they are environmentally unacceptable because of their high fuel consumption.
My suspicious mind led me to wonder whether there was a specific Isle of Wight issue. I would be grateful if the Minister would address in her answer whether specific aspects will be applied to the Isle of Wight service, which, despite all that I have said, is an important part of the infrastructure connections for people living on and visiting the island.
When I had stopped wondering why the measure was being introduced now, after all these years, I wondered whether this was part of the major catching-up exercise that the Minister has bravely embarked on in her department. We know that the Department for Transport has a backlog of marine legislation that long pre-dates her coming into her position there. Is this part of a routine catching up to ensure that we can apply rules to hovercraft that apply to other types of seagoing vehicle? I would be grateful if the Minister could answer my questions now, or in writing afterwards if she is unable to do so immediately.
My Lords, I welcome this order to support the Government in meeting pollution prevention requirements and ultimately making our waters safer in compliance with international standards. Hovercraft are a technical wonder but can be particularly harmful to the natural environment. Although the usage of these vehicles in the United Kingdom is not particularly widespread—indeed, it is not spread at all—Ministers are right to consider how we can eliminate their negative effects.
Although the UK is currently no longer a world leader in sea transport, by decarbonising maritime we can certainly aspire to become one yet again. I hope this instrument can form a small contribution towards that goal.
However, it is disappointing that the development of this order has not been used as an opportunity to properly engage with the limited hovercraft industry that exists today in the UK. While I appreciate the reasons given by the department for not formally consulting on this legislation, I hope the Minister can at least clarify that discussions took place with those who operate in the sector. I also hope she is able to confirm the Government’s wider strategy for improving the cleanliness of the seas through better regulation of the maritime environment.
The noble Lord, Lord Mountevans, raised a point about the criminalisation of seafarers, and I am sure we all share with him that this should not be unreasonable. But we are in an environment—I think Grenfell has brought this environment to our attention—in which the assurance that regulations are fit for purpose, which is the responsibility of government and its agencies, and the execution of those requirements must have a clear responsibility chain. I have no idea about the detail of these orders, but it has to be a good thing for seafarers to be required to be responsible for their craft and confident, as far as reasonably practical, that the state of their craft and its operation are properly regulated.
I am all in favour of this sort of regulation. The important thing is that it must be good regulation that is easy to understand and fairly implemented. There is no case for poor regulation. There is much that good regulation does, and in circumstances where it breaks down it sometimes has a catastrophic consequence.
I thank all noble Lords for their consideration of this order. It was a helpful discussion, and I will address some of the points raised as I am able. I may well write a letter, but I hope not to on this occasion because I think I have some answers, which makes a change.
I turn first to the noble Lord, Lord Mountevans, and the creeping criminalisation of seafarers. It is right that seafarers are held to account, and we should not expect anything other than that. However, it is also the case that we need to make sure that the right seafarers are held to account, and that it is not those at the bottom of the tree who bear the brunt and end up receiving the penalties. It should be those with the responsibility for ensuring that vessels meet the requirements, wherever they come from. It is not our intention to criminalise unnecessarily, but we want to make sure that the appropriate penalties are available where breaches occur and, in this case, that breaches of both safety and pollution prevention incur criminal penalties.
The noble Lord mentioned differences between Southampton and Aberdeen, but I am not sure that there would be. The order enables the Secretary of State to make regulations to make provisions to impose fines and a custodial sentence of up to two years, and that would be the same under the Scottish system as under the England and Wales system. If I have got that wrong, I will write to him. It would not be right that vessels could just go off to Aberdeen and say, “Sorry, you can’t put me in jail up here because I am in Scotland”. I am sure nobody wants that. I will look into that in a little more detail.
The noble Lord, Lord Berkeley, asked: why now? This is resulting from an international obligation, and we are very keen to make sure, particularly on maritime—as the noble Baroness, Lady Randerson, pointed out—that we really are working in as close a lock-step as we possibly can. Noble Lords may say, “Why hovercraft? Aren’t they some outdated technology, et cetera?”. We may think that now, but that does not mean it will be the case in future. Who knows what may come along in future?
The noble Lord, Lord Berkeley, also questioned why it is different. There is an entirely different legislative underpinning to hovercraft, as I have now learnt. They are viewed as very different vessels. Certain regulations apply just to them because they have their specific foibles. The point about what we are trying to do today is to make sure that there is as level a playing field as possible. It is all about bringing together as many vessels as appropriate under the same umbrella to create that level playing field, which I think noble Lords would all agree is fair.
More specifically, hovercraft are subject to something called the high-speed code, within which many of the underlying requirements are the same. For example, manning requirements are the same, although the training required under the high-speed code is slightly different. That is where the differences really occur for hovercraft. This is really more about good housekeeping: because we have lost Section 2(2), we need to make sure that we still have that power available so that everybody has the same requirements as are needed.
The noble Baroness, Lady Randerson, asked about the maritime backlog. I am reliably told that this order is not actually part of that backlog, but who knows? There is still a maritime backlog, but it is getting better. My colleague the Minister for Maritime, Robert Courts, appeared in front of the Secondary Legislation Scrutiny Committee and we were able to update that committee in April this year to say that there are now nine SIs left to make, out of the original backlog of 13. I think that backlog of 13, which is now nine, possibly has things in it which are slightly more substantive than this provision. This is just an opportunity that we took.
The noble Lord, Lord Tunnicliffe, asked about discussions taking place with those who operate in the sector. This is difficult, because nobody actually operates in the sector and there is no indication that the people who currently operate to the Isle of Wight, which is an internal service, are going to change their service at all. They would therefore not be covered. The noble Baroness, in her suspicious way—I was very perturbed about this—assumed that something terrible was going to happen to the Isle of Wight service. I can reassure her that this has nothing to do with the Isle of Wight, so she should not worry: that service will continue.
There will of course be consultations and impact assessments relating to the wider STCW regulations, but that is not for today. That is a whole different kettle of fish that we will, no doubt, have much enjoyment with in due course. For the time being, I hope I have managed to cover all of the questions, apart from that of the noble Lord, Lord Tunnicliffe, about decarbonisation of the maritime sector. I probably do not have time for that today, but perhaps will on another day. In the meantime, I commend this instrument to the Committee.
Public Procurement (International Trade Agreements) (Amendment) Regulations 2022
Considered in Grand Committee
My Lords, the instrument brought forward today will give legal effect in domestic regulations to the United Kingdom’s procurement obligations under the free trade agreement between the UK and EEA EFTA states of Iceland, Liechtenstein and Norway. The EFTA agreement sought to reflect many of the provisions of the EU-EFTA agreement by which the UK was bound when an EU member state. This is part of the Government’s wider approach to provide continuity, as far as possible, in existing trade and investment relationships with third countries that had an agreement with the EU before we left.
The UK-EFTA agreement was signed on 8 July 2021 and completed its scrutiny period prescribed under the Constitutional Reform and Governance Act in October 2021. This instrument is concerned with implementing the procurement obligations contained in that agreement. The procurement provisions will ensure that UK businesses will continue to be able to access procurement opportunities in these three countries. This coverage is reciprocated by the UK giving businesses from those EFTA states no less favourable treatment when conducting its procurements covered by the agreement.
The UK has an open procurement market underpinned by principles of non-discrimination and equal treatment. However, without this instrument, there is a risk that, in respect of procurements covered by the agreement, relevant EFTA businesses will not be entitled to the legal remedies that the UK has committed to in the agreement. This instrument therefore ensures that we fulfil our obligations.
In terms of the coverage in the agreement, the UK is an independent party to the World Trade Organization’s Agreement on Government Procurement—or GPA, as it is known—along with Iceland, Liechtenstein, Norway and other major world economies. The GPA aims to mutually open global public procurement markets and is worth some £1.3 trillion in guaranteed access to global procurement opportunities for UK firms.
The UK-EFTA agreement incorporates the relevant GPA provisions, and goes further. The procurement coverage is similar to the UK’s coverage under the EU’s agreement with the EEA EFTA states, with some exceptions including in respect of health services.
This instrument is being made using powers set out in Section 2 of the Trade Act 2021. It will add the UK-EFTA agreement to the existing schedules of international trade agreements contained in the various UK and Scottish procurement regulations to ensure that no less favourable treatment is accorded to businesses of Iceland, Liechtenstein and Norway, where the procurement is covered by the terms of the agreement. It will also make explicit in those procurement regulations that contracting authorities can make inquiries as to whether subsidies form part of an abnormally low tender, as provided for in the agreement.
Importantly, these amendments do not add any burdens to the UK’s procurement process, nor do they reduce any of the UK’s procurement standards.
The provisions will be implemented across the United Kingdom. We have consulted officials from the devolved Administrations throughout the process. We have also formally notified each Administration, via ministerial letters, of our intention to lay this instrument. The Scottish and Welsh Governments have formally agreed to our approach and the Northern Ireland Executive Minister responsible for procurement has confirmed that he did not have any objections. I therefore thank each Administration for their engagement and collaboration.
Any amendments to the procurement coverage in the UK-EFTA agreement, or other international trade agreements, will require further legislation to give them legal effect. Any future trade agreements which the UK signs or has signed—for example, with Australia and New Zealand—will be implemented by separate legislation.
I hope that noble Lords will join me in supporting these draft regulations. I commend them to the Committee and beg to move.
My Lords, I am very glad to have the opportunity to say a few words about these regulations and I thank my noble friend for introducing them so clearly. As somebody who laboured long and hard on the Trade Act 2021, it is always a pleasure to see the powers being used. There may not be many such further events but it is interesting to see it being used in this case.
I must confess that the reason I looked at these regulations was that, as my noble friend will recall, at Second Reading of the Procurement Bill I raised the interaction between that legislation and the Trade (Australia and New Zealand) Bill, which had, of course, been introduced at the same time in the other place. I looked at this instrument and thought, “How does this relate to the Procurement Bill?” Like the Australia and New Zealand Bill, as far as I can see, the Procurement Bill will supersede these regulations when it becomes law. Schedule 9 to the Procurement Bill incorporates the UK-EFTA agreement into the list of treaty state suppliers. So far, so fairly straightforward: we need these regulations to give effect to the agreement in the intervening period.
However, there is an issue about what these regulations do, because they also amend public contract, concession contract and utilities contract regulations to include the further provision relating to abnormally low tenders. It is a question of whether the price or costs take into account the grant of subsidies. First, I ask: does the preceding EU-EFTA economic area agreement have the same language? It seemed surprising if it did, on the face of it, because existing regulations, which are part of the structure of EU regulation, already take account of whether—to cite Regulation 69 of the Public Contracts Regulations, for example—the abnormally low tender price is because of the possibility of the tenderer obtaining state aid.
I should have thought that, in the EU context, the question of state aid and grant of subsidy were regarded as effectively the same thing. I suspect, therefore, that EFTA countries are saying that the words “state aid” do not necessarily have the same meaning in United Kingdom in future as “state aid” did in the EU in the past. I may be wrong about that, but I should be interested to know whether that is the case.
Anyway, this additional provision in the regulations changes, for example, Regulation 69 of the Public Contracts Regulations, which relates to abnormally low tenders. I thought, “Let’s see how this is incorporated into the Procurement Bill”, but I cannot find it. So, my other question is: how will that Bill incorporate the provisions of, for example, Regulation 69 relating to abnormally low tenders into the structure of our regulation in future? I am happy to be guided by my noble friend on that, not least because it will no doubt give us an opportunity to learn a bit more about how the Procurement Bill itself will work in future. Subject to those questions, I am glad to take the opportunity to welcome the regulations and support my noble friend.
I, too, am pleased to speak to some of the issues before us this afternoon and thank and congratulate my noble friend on bringing forward the regulations. My noble friend Lord Lansley has eloquently addressed a number of issues on the relationship between this instrument and the public procurement Bill. But there is also the broader context of our new relationships with the EU and, now, with the three countries before us this afternoon. What is generally understood by “state aid” and has our policy towards them changed in that regard?
Perhaps the thing that concerns me most is this. My noble friend spoke about the GPA, the global procurement agreement to which we have signed up, and mentioned that it is worth £1.3 trillion to the UK economy. When the Trade Bill was passing through—I also took an interest in that at the time, and my noble friend Lord Grimstone spent hours trying to allay our concerns in this regard—it was curious that any public service was obliged to declare a contract worth, I think, €130,000 and to put it out for tender.
I thought that one of the biggest dividends of leaving the European Union might be that our schools, colleges, hospitals, Army, Parliament—all public bodies that were putting out a public contract for tender for, say, food—could be opened up to local suppliers. I was told by my noble friend Lord Grimstone that that was not the case and that any contract worth more than $130,000—I think that is the figure now—is covered by the GPA. If that is the case, we have not benefited from leaving the European Union but are bound by the GPA, which—I accept—brings trillions of pounds of value to this country.
The Government Food Strategy launched and published on Monday clearly states that we want:
“Public procurement leading by example”.
I will read out paragraph 2.4.2:
“To deliver this vision, we are consulting on public sector food and catering policy, including the Government Buying Standards for Food and Catering Services ... We will consider widening the scope of the policy to be mandatory across the whole public sector. Within the consultation we will propose that the public sector reports on progress towards an aspiration that 50% of its food expenditure is on food produced locally or to higher environmental production standards such as organic, Linking Environment and Farming (LEAF) Marque or equivalent, while maintaining value for money for taxpayers.”
There are two issues here. First, I absolutely welcome the fact that it will be produced to our UK standards. It was in the Conservative Party manifesto on two separate occasions that any food we eat, whether imported or home produced, would be produced to the same high standard. That is absolutely super. But there is something I am failing to understand. I have always wanted to have the local farmer, or grower if it is fruit and vegetables, produce for the prisons, schools and hospitals locally, but my understanding—I would be most grateful if my noble friend the Minister would clarify this—is that that can apply only to contracts for tender of less than $130,000, which I presume is about £100,000 or £110,000.
I am trying to square the circle between what was announced in the food strategy—which I have always wanted to do and was told we could not do when we were part of the European Union—and, our having left the European Union, being told that we could not do it because we are still bound by the GPA. If that is the case, presumably the public procurement leading by example is only for government buying standards for contracts of less than $130,000. They are quite meaningful, but smaller contracts than would otherwise be the case.
To return to the instrument before us, I would love to know how many instances my noble friend and his department might expect of contracts under the EEA EFTA agreement that would be deemed to be “abnormally low tenders”, as in paragraph 7.5 of the Explanatory Memorandum. I have never visited Liechtenstein, but I am reasonably familiar with Iceland and Norway and I would have thought that their contracts are quite expensive, so I would like to know in how many instances my noble friend thinks they might be faced with “abnormally low tenders”.
With those few remarks, I welcome the regulations before us but seek clarification on the public procurement aspects.
My Lords, I am grateful to the Minister for introducing these regulations. As he and others have stated, they are basically a continuity agreement while we process the much bigger piece of legislation to which the noble Lord, Lord Lansley, referred, the Procurement Bill. One of the things I open with is to repeat the mantra that the Minister often does about how this House conducts its role in scrutiny of legislation. When I read Hansard from the other end, I thought I would get some useful questions from the Opposition—and of course there was none, so I am grateful for noble Lords here today who have prompted an interesting debate. I suspect that most of the questions will be answered on the general legislation on procurement—the Procurement Bill—including some of the issues that we will address in amendments, not least defence and security, which are critical issues.
I do not want to repeat the points made by the noble Lord, Lord Lansley. I will be interested to hear the Minister’s response, but the Opposition support the instrument and are happy that it provides the continuity necessary before other legislation takes over. I should add that I am not formally becoming a shadow Cabinet Office Minister; I am simply standing in for my leader, who covers these issues—and as deputy leader I of course do as I am told. I have at least been able to speak for a short time in support of the instrument. I echo some of the comments already made and I look forward to the Minister’s response.
My Lords, I thank those who have spoken, including the noble Lord opposite; I nearly always say “my noble friend opposite”. I also looked at the proceedings in another place, but I will tread no closer to that than he did.
I am grateful for the general welcome for these provisions. I was asked a couple of points. I am not sure I can answer every one, but if I do not I am sure we will pick them up. On the question of whether state subsidy is defined in the regulations, it is not defined in this SI. It was also not defined in the UK-EFTA agreement procurement chapter from which this follows.
I was asked about abnormally low tenders and subsidies going more widely than the definitional point. Article 6.9 of the UK-EFTA agreement provides that, where a tender appears to be abnormally low, the contracting authority may ask a supplier whether the price in a tender takes subsidies into account. That was the point to which my noble friend acutely referred. The instrument makes this explicit—it is on the face of the procurement regulations. Prior to the UK leaving the EU, contracting authorities and utilities receiving an abnormally low tender could investigate whether the supplier had obtained state aid and, if that was not compatible with Article 107 of the Treaty on the Functioning of the European Union, it could reject the tender. These provisions were removed from the public procurement regulations through EU exit legislation.
The current procurement regulations are largely transposed from the EU directives, which include a number of permissive provisions. For this reason, it makes sense to make explicit mention of the fact that, when investigating abnormally low tenders, contracting authorities are able to make inquiries as to whether the bid includes subsidies. However, overall the Procurement Bill will aim to deliver a simpler regulatory framework and increased flexibility and does not include every possible action that a contracting authority might take. Therefore, there has not been such an impetus to make explicit this provision in the new Bill.
So far as the relationship is concerned between the Bill and where we are now—and both my noble friends referred to the period between now and the coming into being of the Procurement Act, if your Lordships so please; I am never daring enough to take that for granted—we need to bring forward this statutory instrument now to amend existing procurement regulations to enable the procurement provisions of the UK-EFTA agreement to come into force as soon as possible. When the Procurement Bill has received Royal Assent, during its implementation period it will repeal certain UK procurement regulations, including the UK public contracts regulations; the UK utilities contracts regulations; and the UK concession contracts regulations, to which the UK-EFTA agreement is being added. However, this is not expected until at least six months after Royal Assent.
The UK-EFTA agreement is included in Schedule 9 to the Procurement Bill, along with all other relevant international trade agreements, which ensures that the procurement obligations regarding EFTA suppliers will be carried forward seamlessly into the new regime. The amendments made by these regulations also add, as I said in my opening remarks, the UK-EFTA agreement to the corresponding Scottish procurement regulations, which will not be affected by the Procurement Bill.
I assure my noble friend Lady McIntosh, as again I said in my opening remarks, that nothing in this SI or, indeed, in the UK-EFTA arrangements overall, reduces any standards. We remain committed to holding up high environmental product and labour standards, and I can certainly give that assurance.
On the question of the lower thresholds in legislation, there are provisions—and I am happy to correspond or at least send advice to my noble friend before we reach the Procurement Bill. As she will see, there is a whole section relating to the level below which there are exemptions. We must abide by our international obligations in relation to trade under the GPA; that is, to give fair access to both sides of the agreement, which is reflected in these regulations.
We have enjoyed a strong trading relationship with Iceland, Liechtenstein and Norway for many years, as some noble Lords were kind enough to refer to. Indeed, I think that Norway is in the top 10—perhaps our 10th most important trading partner. By implementing UK-EFTA procurement commitments, this instrument will, we hope, help to continue and build on this prosperous and friendly relationship between our four countries.
I hope that colleagues will join me in supporting these regulations. I am grateful for the general tenor of the debate. I commend the regulations to the Committee.
Committee adjourned at 5.14 pm.