My Lords, I have given the answer that I have been advised to give at this stage. In answer to the further supplementary question that my noble friend has asked, I will ask officials to clarify what I said. I was advised to inform the Committee that it does not mean that entities such as Royal Mail that operate a private postal service are covered. If that needs further clarification, I am sure that we can provide it.
These joint bodies are extraordinarily important. Noble Lords have spoken, particularly of local authorities, with great experience, which I hugely respect. I am second to none in believing that Governments of all colours do not generally do enough to listen to the wisdom of local government. I have said that on the Back Benches and on the Front Bench and under Labour, coalition and Conservative Governments. In answer to the noble Lord, Lord Coaker, this Government are certainly keen to ensure that local authorities will be able to operate as they did before, which was one of the reasons why this amendment was tabled, as he divined. I pay tribute to the Local Government Association for its consistent engagement. The Bill maintains the position in the current procurement regime, albeit adjusted for the purpose of UK law, by using the terminology of bodies that undertake public functions, which is drawn from the test of average functions of a public nature derived from the Human Rights Act 1998 —a complicated but well-established test, I understand.
I was asked by my noble friend Lady Noakes about decisive influence and dominant influence. I have to be very careful speaking personally as a Minister from the Dispatch Box, but our position is that we believe that the amendments we have tabled are clear and sufficient. However, on my noble friend’s question, the reference to the Companies Act 2006 is used to describe the nature of relationships between those entities that can engage in the exemption. The reference to decisive influence is broad in affecting the decision-making of the contracting authority. I will take away my noble friend’s point and consider it further, because interest was displayed by other Members in the Committee.
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Similarly, we will reflect on the point made about capacity to control. This was discussed on Monday, and I said then that we would reflect on that issue. My noble friend made the point on Monday, as she and
noble Lords opposite did again today, that the mere capacity to control could be as decisive as actual control. I think noble Lords want to understand more what that entails. I cannot promise that the Government will alter their position, but we will certainly reflect on what noble Lords have said.
Amendment 11A, tabled by my noble friend Lady Noakes, would remove a provision on private sector shareholders in Teckal companies. The Teckal exemption is familiar to me—I spent a few hours with my former chief executive discussing what we might or might not be able to do in the light of the 1999 Teckal judgment in the ECJ. It recognises that contracting authorities may wish to create alternative structures, as local authorities do within the public realm in order to deliver public services, including the setting up of companies. In recognition of the fact that contracting authorities exercise equivalent control over these companies to that which they exercise over their own internal departments, they are not required, as noble Lords know, to compete contracts awarded to these companies, as they are effectively in-house arrangements.
The Government’s position, contrary to what my noble friend said, and notwithstanding what she said about one share, is that allowing private sector participation in these companies could distort competition, as it puts these companies at a competitive advantage compared with others in the private sector. It is not therefore appropriate that companies part-owned by the private sector can be awarded contracts without competition under this exemption.
However, I recognise the great practical expertise of many noble Lords, including my noble friend Lord Moylan, who spoke on these matters. Given that our intention is not to shackle overall the ability of local authorities to operate—and it is local authorities in particular—and in requesting that my noble friend withdraw her amendment, having set out the Government’s position that we are unattracted to allowing private sector participation, I undertake to engage with colleagues on that between now and Report.
On my noble friend Lord Moylan’s pertinent question, local authorities set up a range of organisations. Trusts were mentioned. I set up a trust to try to protect a piece of public, open land, but unfortunately the successor council is now seeking a compulsory purchase order to build on it and break the trust. Local authorities have many ways of trying to deliver and protect public services.
I say to my noble friend Lord Moylan that our intent is to include all the types of organisations that are exempt under Regulation 12 of the Public Contracts Regulations 2015. It is the view of officials that unincorporated associations are captured in that, but we will write to confirm and will reflect on these matters. The basic purpose of this Bill is to create, I hope, a more open and dynamic procurement system. I know that noble Lords on all sides have their doubts, but that is our hope and aim. In that light, we will reflect on the points made from all sides.
I was asked about the Scottish legal point. I apologise, but I am not in a position to answer that specifically today—maybe it should be added to the letter which the noble Lord asked for on Monday, which is on the
way. If I may, I will take that away. It is an important point that both noble Lords alluded to regarding what might happen in the future. I do not have access currently to the legal advice which would enable me to answer that, but I undertake to write to noble Lords, in common with all the other things that come up in Committee. I will not wait until the end of Committee to send letters, but there was just a particular point of pressure over the last 24 hours.