Examination of Witnesses (Questions 60-79)
MR ELLIOT
MORLEY, MR
DAVID RABEY
AND MS
JILL RUTTER
30 NOVEMBER 2005
Q60 Lynne Featherstone: That is helpful.
We look forward to the report. I hope marks out of 10 are going
to be given and punishment meted out if those are not given in.
Narrowing it down because procurement is a pretty broad area,
if we just look at the construction industry side of it, we have
a memo from the EIC (Environment Industries Commission) that states
that one of its members discovered that only two out of 70 public
sector construction projects that it had tendered for earlier
this year had specific energy efficiency requirements. I would
have thought those sorts of requirements would be standard. Why
are they not?
Mr Morley: I am pretty sure that
there are energy efficiency requirements for any contractor. What
the EIC may not unreasonably be concerned about is the level of
those standards. Of course, we do want to ensure that the standards
we apply are the very highest. In relation to buildings that we
have commissioned (and I can give you a list of recent buildings
and refurbishments) we set the BREEAM "excellent" rating.
Of course, that is the basis of the contract that we put out to
industry in relation to the work. ODPM is currently developing
a new code for sustainable building, which will be published very
soon, Chairman. That will be the new guidance in relation to the
kind of standards that we aspire to in government contracts.
Q61 Lynne Featherstone: I think there
should be checking and monitoring going on. Two out of 70 are
meeting requirements where you say should they have a requirement.
Mr Morley: It depends what you
mean by "requirements". That needs some clarification.
There are requirements but they may think their requirements are
high enough. I might not think they are high enough requirements.
I certainly accept that in relation to our contracts there is
a need for proper monitoring and to make sure that there is clarity
in relation to all government departments on the issuing of contracts.
Q62 Lynne Featherstone: There needs to
be clarity about checking and monitoring. There is a lot of talking
good going on. The EIC also tells us that despite the Prime Minister
saying in September 2004 that "all new schools and city academies
should be models for sustainable development"—a statement
of what we all hoped would be of the obvious—the reality
is very different. If the public sector is lagging far behind
the inspirational standards of central government, what can be
done?
Mr Morley: We do need to make
sure that there is that consistency and that we encourage not
just high standards but the very best standards. The problem is
that there may be some lack of consistency in relation to the
commissioning across local authorities for such things as new
schools. I can tell you, Chairman, that a new school has been
built in my own constituency which has rainwater catchment and
very high standards of insulation. You are beginning to see these
standards appearing in such things as new schools. I would like
to go further than that. I know that my colleagues in DFES want
to go further than that as well.
The Committee suspended from 4.03 pm to
4.13 pm for a division in the House
Q63 Chairman: Following on from Lynne
Featherstone's question, it is not just a member of the EIC who
is reporting bad news in terms of the construction industry. We
had a memo from the Sustainable Development Commission that pointed
out that in Sustainable Development in Government 2004
(SDiG 2004) only three out of 147 new-build government construction
projects reached the BREEAM "excellent" rating. There
clearly is a significant problem there, is there not?
Mr Morley: I need to analyse those
figures, Chairman. It is the case that I do not think it is compulsory
to have the BREEAM "excellent" rating. If you are going
back to whole life costings, we think that is good value for money,
although you may have to spend out more initially on it.
Q64 Chairman: We rather found in our
housing inquiry that the "excellent" rating was not
particularly hard to achieve, which makes it even more disturbing.
Also, Jill Rutter, when you were last in front of this committee
you told us that one of the reasons why some Scandinavian countries
have moved ahead of us in terms of procurement is because of the
attention that they have paid to the construction sector.
Ms Rutter: I think that is right.
That was an ad hoc, off-hand view. One of the things that
the Procurement Task Force is doing is much more systematically
benchmarking where the UK stands against a lot of other countries.
I think they have been looking at 25 countries. Obviously, in
the SD strategy, we set out the aspiration of being amongst the
leaders in Europe by 2009. One of the areas the committee picked
us up on last time was that we were not quite sure what that meant.
We had a vague, un-evidence-based aspiration. We are going much
more firmly to base that. I think it does emerge that the Scandinavians
are where you would look for leadership on construction. It is
interesting that on social issues, one of the three pillars of
sustainability, one of the things that has emerged from benchmarking
is that nowhere has really cracked the social issues.
Chairman: We are going to explore this
area shortly.
Q65 Dr Turner: Elliot, you have a lead
on energy efficiency. The Government has a huge estate, if you
count schools, hospitals, et cetera. Is there not a huge opportunity
there to really take a strong lead on energy efficiency and lay
down standards for all government construction?
Mr Morley: Yes, I believe there
is. We are trying to address those issues. I should say, Chairman,
that it is a bit easier for the Government estate because we have
direct control over that. For example, on energy efficiency, Defra's
energy and electricity is 100% from renewable sources. In fact,
in the Defra estate around the country, the figure is about 80%
from renewables. We have just installed in Worcester a biomass
boiler heating system in the Defra regional office there. Of course,
you have to bear in mind that hospitals come under the regional
health authority and schools come under local authorities. Therefore,
our levers are weaker in those areas. That is not to say that
we should not address these issues because, of course, energy
efficiency in the whole public sector estate, not just the government
estate which is the easy one for us, which includes our agencies
incidentally and non-departmental public bodies, has to be addressed.
It is not just about a contribution to reducing emissions and
therefore helping us meet our targets under climate change; there
are also potential savings here as well. That is important, too.
Q66 Dr Turner: Is it not fair just to
say that there is an opportunity. If you set standards and central
government says, for instance to regional health authorities or
to local LEAs, "You cannot have the money for these capital
projects unless they meet these standards", you have a very
powerful lever.
Mr Morley: Yes, I think that is
a powerful lever for new build, though I am quite interested in
retro-fitting to existing buildings as well. New build is a bit
easier because you can indeed do that. You can have stipulations
and contract requirements. Increasingly, we are doing that. The
Building Schools for the Future programme, for example, which
is the biggest school building programme in the country, is seeing
this and there are real opportunities there. I certainly agree
that we need to have clear guidance and the kind of toolkits we
were talking about: perhaps model contracts which OGC have been
looking at; and issues which the Sustainable Procurement Task
Force are looking at in relation to their working groups. We are
looking to the task force group to give us some guidance on this
in relation to some of the models and templates that we could
follow.
Q67 Joan Walley: I have the details of
the conference you were at that was jointly organised by Defra
and OGC. I am puzzled in respect of how we get not just somewhere
in Worcester to come and comply with this state-of-the art standard
but mandatory standards right the way across the country in all
that is done in local authorities on the private finance issues,
the health agenda, and so on. I am unclear why it is that you
have rejected a call for the introduction of mandatory standards.
If it is about not wanting to introduce more targets and more
regulation and to give local authorities that freedom, how can
you be sure that there is that minimum basic standard? It seems
to me to be inconsistent: you are saying one thing but you have
the opportunity to introduce that mandatory standard and you have
chosen not to take it. You might get the good councils doing this
where they have that expertise but not otherwise.
Mr Morley: We have an agreement
with the LGA that we will not introduce new burdens on local councils
without significant extra resources.
Q68 Joan Walley: Surely this is important
enough for that?
Mr Morley: I think I would be
persuaded by the committee on that point.
Q69 Joan Walley: What are you waiting
for?
Mr Morley: The view is that the
agreement with the Local Government Association will mean a minimum
on new mandatory standards. In all fairness, while I think I could
be persuaded about the case for mandatory standards, we have to
recognise that a one-size-fits-all approach is not always desirable
in relation to local government, recognising that there are inner
cities, suburbs and rural areas, and there are different issues
in different areas. Local authorities will not be slow to argue
that they should have some freedom of flexibility in terms of
applying the best standards for their area. That is behind the
philosophy on that.
Q70 Joan Walley: So we all go down to
the lowest common denominator and hard-working MPs get the better
things?
Mr Morley: Not necessary. There
are some exemplar local authorities in what they have done in
relation to energy standards: Woking, Nottingham and Leicester.
Q71 Joan Walley: We need that for the
whole of the country.
Mr Morley: We do need that for
the whole of the country. The challenge for the Government is
how we can encourage that. It may require some financial assistance
to try to force some of these standards but the idea of mandatory
standards for local authorities is not popular with local authorities
and it does not feature in the agreements we have with the Local
Government Association.
Q72 Joan Walley: So we are going to lose
this wonderful opportunity really to improve standards that we
put in?
Mr Morley: Not necessarily. As
I say, there are some excellent examples of what local authorities
are doing. I am in the process of travelling the country and talking
to local authorities about a whole range of sustainability issues—local
sourcing of food, for example for school meals; energy efficiency;
school build and design—and trying to drive the standards
forward. There may come a point where a statutory standards may
be justifiable. We may get to that point but at the moment there
is a lot of room for a coalition of the willing within local authorities.
There will always be those that have to be dragged along kicking
and screaming. It may well be that the mandatory standards will
come in at some point for those.
Q73 David Howarth: I have a good deal
of sympathy for what you are saying, as someone with a local government
background. I was wondering whether there might be another aspect
to this and whether there are barriers to local authorities increasing
or improving their standards, which are caused by other targets
that have been set by other departments. One of the problems here
is that if you do not set a target, and other departments are
setting targets, local government will tend to look to those other
targets rather than to your targets. Perhaps this should be approached
on a more cross-departmental basis?
Mr Morley: Yes, it is crucial
that we have a cross-departmental approach on these issues. If
we want to put sustainable development at the heart of the Government's
policies, then it has to be mainstreamed across all government
departments. That is part of the objective of the Sustainable
Development Strategy that we have. We would expect all government
departments to work within that strategy.
Q74 Mrs Villiers: I have a lot of sympathy
with your position that you do not necessarily want to burden
local authorities with yet more prescriptive standards, regulations
and targets, but I think there is a problem here in that local
authorities are subject to very stringent regulations in terms
of the economic aspects of procurement. Having those kinds of
regulations, targets and standards in respect of financial and
economic matters and not having them in respect of environmental
matters I would have thought would constrain even the willing,
as you have just called them. Even councils that want to be green,
are they not going to be quite constrained from being green if
they want to be by the better value rules that they have, which
focus just on economic matters?
Mr Morley: They have not been
constrained so far. It is really a question of physical will.
Woking, for example, I understand has cut emissions from its public
buildings under its control by 70%. Woking also entered into an
alliance with the energy companies on the energy efficiency commitment,
the so-called EEC. With some money from British Gas, they were
offering householders a £100 discount on council tax if they
installed extra insulation for energy efficiency. We very much
like this approach and would like to see this rolled out in other
areas. That is an example of where local councils have used some
of their own resources, and of course many councils do have their
priorities and they can choose where they allocate money and for
what. Woking, Nottingham and others have decided to give a high
priority in relation to energy efficiency and emissions. I very
much welcome that. There may well be some areas like the EEC that
can provide finance to work alongside them. There might be some
measures that we as a government could take to encourage these
kinds of approaches. That is under consideration as part of normal
Government review of policy.
Q75 Ms Barlow: To move back to government
targets, you have said that you want to be the leader in Europe
for sustainable government procurement by 2009. Can you tell me
exactly how far up the league table we are now?
Mr Morley: On some areas of procurement
we probably lead in Europe. There are other countries that at
the moment are modelling their procurement strategies on what
we have achieved here in the UK. On other areas, as you have heard,
such as construction standards in relation to the standards that
are applied in government contracts, we are probably behind. While
I do not know exactly what other countries are doing in every
detail, in relation to some of the work that we are doing in the
Sustainable Procurement Task Force, for example, I am not aware
of many other governments that are as advanced as that. While
some countries may be better than we are in some areas, we are
giving a lead in others. What we want to do is to address those
areas where we are behind.
Ms Rutter: When I gave evidence
last time I think I said that our colleagues were, as part of
the UK presidency doing some benchmarking to understand where
we are in Europe. I said that we thought then we were top second
division, using some tortured football analogy which I cannot
now remember. We have revealed from that that we are in the top
seven of the EU 25 Member States. As the Minister has said, we
have a variable performance on different things. That is on green
public procurement, as I mentioned earlier, not the social issues.
If we manage to do something serious on social issues, then we
will go to the top of the class because there does not seem to
be much competition out there. This is one of the emerging results
from the task force.
Q76 Ms Barlow: Where were we originally
and where have we moved to on the scale?
Ms Rutter: I do not know that
we have done enough work on that. This is a comparative study;
this is where people are now rather than where we are moving to.
The ambition is that we go from that to be one of the top three
or four.
Mr Morley: I think, given the
fact that we have a history of government and public sector procurement
that has quite ruthlessly gone for the cheapest option, we were
pretty low down, but I think we have moved up the league table
quite a bit.
Q77 Chairman: When Ms Rutter gave her
evidence earlier this year, we were talking about Sweden at around
50%, Denmark at around 40%; we were at 22%, only 3% higher than
the national average. Do you know, in percentage terms, how our
performance has improved and where it is now?
Ms Rutter: I do not think this
is an improvement compared to that. This needs more rigorous work
to understand. Our colleagues have recently had a UK presidency
event on procurement and standards with other EU colleagues. If
there is more detail on that, then we can easily let the committee
have a brief note on what the latest state of evidence is and
where we stand in Europe, if that would be helpful.
Q78 Ms Barlow: It would be good to have
those figures. If you look country-wide, the figure is 50% compared
to 22%. However we are shifting on the league table, it is still
quite a significant difference. Have you got an actual figure
about where you want to be by 2009?
Ms Rutter: One of the things we
are looking for in the task force report is that they are going
to set out—obviously this is a report to ministers and so
it will then have to be considered by ministers and by the Government—what
they would regard as being a leader in Europe by 2009. Their remit
is to ask what it would take for the UK to be a leader. The first
thing is to define what they would mean by that, and then to make
recommendations for the suite of measures. Picking up on an earlier
point from Mrs Villiers, the task force does have on it a representative
chief executive of Norfolk representing the LGA, so local government
is part of that task force process. Some work is going on now
to look with some local authorities to try to crystallise what
money is being left on the table by not purchasing to higher standards.
Part of the task force report is to produce some concrete material
to persuade people in local government that this is a good thing
for them to be doing and that it makes sense both in narrow cash
terms as well as in terms of delivering wider objectives. We will
go back and see what evidence we have now as a result of our EU
activities.
Q79 Ms Barlow: Just to recap, the task
force is due to report back in April next year. Part of its remit
is to give actual percentage terms in every measurable area. How
are you going to measure it? Will that be in individual areas
or overall, rather than just an aim on a league table?
Ms Rutter: The task force is six
months through its work, so it is at this halfway point. At the
moment, it is very much in the data-gathering stage. It has been
doing a lot of data-gathering. The group on international benchmarking
is being chaired by the Environment Agency that has done quite
a lot of benchmarking itself. Quite how they want to choose to
define that is a matter for the task force, which they will be
considering at one of their next three meetings before they finally
report to the full group. I do not know quite what that is going
to look like.
Mr Morley: I spoke with the Chairman,
Sir Neville Simms, this week, and he gave me a run-down on the
work in progress, which is very much on course. He said that he
was on target to report in April, as predicted.
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