My Lords, I will speak to Amendments 186, 292, 297, 315, 319 and 519. I express my gratitude to the noble Baroness, Lady Bennett, and my noble friends Lord Hain and Lord Monks for adding their names. Of course, I support the amendments moved by my noble friend Lord Knight, for the reasons he advanced.
All the amendments in this group are designed to utilise the tremendous power of public procurement to improve the lot of Britain’s 32 million-strong workforce. As the Minister reminded us at Second Reading, £300 billion of public contracts is involved, some 13% of GDP. Public contracts involve tens of thousands of employers and hundreds of thousands, if not millions, of workers in their execution.
At Second Reading, I tried to make the case for the Bill to restore the fair wages resolution of the House of Commons, which subsisted to protect terms and conditions from 1891 through to 1983. The response of the Minister, the noble Lord, Lord True, was:
“To impose your political objectives on a nation, you have to win an election and form a Government.”—[Official Report, 25/5/22; col. 925.]
He made that point earlier this afternoon in different words. It was a powerful point, but we do not think it is sufficiently powerful to answer the amendments proposed.
There are two reasons for this, one ethical and the other legal. I will deal with the ethical issue first. As we know, Clause 11(1) of the Bill includes “maximising public benefit” as one of four objectives to which the contracting bodies must have regard in letting public contracts. Clearly, one way of maximising benefit is to improve or maintain the condition of the working lives of both the workers engaged on public contracts and the many more millions whose employers will be influenced by the terms and conditions set on public contracts.
The other side of that coin is the public benefit in preventing bad employers undercutting good ones in the obtaining of public contracts. Bad employers such as P&O Ferries, which deployed employment practices which the Prime Minister and other Ministers condemned as abominable, should not on any basis be the beneficiaries of public contracts, as I am sure the Minister will agree. Schedules 6 and 7 of the Bill already specify various mandatory and discretionary grounds for excluding potential bidders from public contracts, among which are various forms of abuse of workers. So the principle is established, but the exclusions do not go far enough.
Amendments 186 and 319—one is mandatory and the other discretionary, if your Lordships do not like the idea of mandatory exclusion on this basis—would provide for the possible exclusion of bidders on the basis that the bidder has been found by an employment tribunal or court to have significantly breached the rights of an employee or worker, or that it has admitted that it significantly breached those rights, or that it has made a payment to an employee or worker in respect of a significant breach of their rights. That would catch the P&O Ferries-type employer. Of course, it is necessary to include, as the previous legislation did, a mechanism for self-cleansing so that bidders that are genuinely remorseful and have changed their practice can be included.
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I have also defined rights broadly. The idea of a significant breach of rights turns on what rights are protected. Looking at it broadly, it should cover: common law; contract and tort; statutory rights, of course; and those protected by the international obligations of the UK, which are set out in Article 399 of the Brexit deal, the trade and co-operation agreement of 2020, which I will come back to later.
The Bill’s existing grounds do not do anything to protect against the sort of behaviour manifested by P&O Ferries, and although they protect against child labour, modern slavery and so on, they do not protect fundamental trade union freedoms, including the right to bargain collectively. In fact, the Bill, in revoking the existing procurement legislation contained in the Public Contracts Regulations 2015 and parallel regulations, actually removes the present discretion to exclude bidders that have breached these fundamental rights, and currently does not replace that discretion. I do not understand what justification there might be for what is in effect a diminution of labour standards by the Bill, and I would be grateful to hear what the Minister has to say on that.
I will explain the current position. Regulation 57(1) of the 2015 regulations, which is the existing legislative structure, obliges contracting authorities to exclude a bidder if it has been convicted of any of various specified offences, including child labour and other forms of human trafficking. That provision, reworded, is reproduced in the Bill, but Regulation 56(2) of the 2015 regulations also permits a public authority to refuse a tender where the authority has established that the tender does not comply with the various environmental, social and labour law obligations listed in Annexe X to the relevant EU directive, Directive 2014/24, on public procurement. This is, in effect, reiterated in Regulation 57(8)(a).
I will summarise the labour law provisions listed in Annexe X: ILO convention C087, on freedom of association and the protection of the right to organise; ILO convention C098, on the right to organise and collective bargaining; and various other conventions on forced labour, minimum age, discrimination, equal remuneration and child labour. The UK of course has ratified and is bound by each of those international treaties. The specified labour standard grounds for exclusion should be added back into the Bill, preferably
by making them mandatory for public authorities, but if not, at least giving public authorities the discretion to exclude on those grounds.
So much for ethics. I come to the legal reason why the Government need the amendments that we propose. In short, this is deference to the rule of law. Of course, the first point is that the UK is bound by the ILO conventions, which are listed in Annexe X, so its legislation should be guided by them. Putting it conversely, it is not consistent with the rule of law to remove treaty obligations from the legislation governing public procurement where they previously had effect.
However, the legal issue goes further than that: the Brexit deal—the trade and co-operation agreement to which I referred—provides in Article 399.2 that, among other things,
“each Party commits to respecting, promoting and effectively implementing the internationally recognised core labour standards, as defined in the fundamental ILO Conventions, which are … freedom of association and the effective recognition of the right to collective bargaining”,
and other conventions on forced labour, child labour, and discrimination.
Article 399.5 provides that
“Each Party commits to implementing all the ILO Conventions that the United Kingdom and the Member States … have respectively ratified and the different provisions of the European Social Charter that, as members of the Council of Europe, the Member States and the United Kingdom have respectively accepted.”
So the conventions listed in Annexe X are among the fundamental ILO conventions and fall squarely within the internationally recognised core labour standards. The UK and the EU member states have the obligation not only to respect and promote the conventions but to effectively to implement them. The duty of implementation surely prevents the Government from removing those ratified obligations from a legislative area in which they previously applied. This should not be confused with Article 387, but in view of the time I will not deal with that now. Article 399.5, which I quoted, goes further than the ILO conventions and refers to the European Social Charter, which in Article 6 protects the freedom of trade unions to bargain collectively.
Finally, my Amendment 519 would effect the Local Government Act 1988, which is referred to in Clause 104 of the Bill. Section 17 of the Act barred local authorities from taking into account certain “non-commercial matters” in the selection of contractors, including terms and conditions of work and the legal status of workers. These inclusions do not appear to be consistent with the obligations in relation to the labour law provisions in the current Bill, and my amendment would repeal the relevant subsections.
I am conscious that the amendments are modest compared to the scope of the Welsh Government’s Social Partnership and Public Procurement (Wales) Bill, which will put collective agreement, social partnership and good labour standards at the heart of public contracting in Wales. The fair wages Bill currently before the New Zealand Parliament goes further still. Collective bargaining is a model elsewhere in western Europe and is advocated by both the ILO and the OECD. I urge the Minister to take these examples to heart.