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UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC740-i House of COMMONS MINUTES OF EVIDENCE TAKEN BEFORE ENVIRONMENTAL AUDIT COMMITTEE
SUSTAINABLE PROCUREMENT: THE WAY FORWARD
WEDNEsday 30 NOVEMBER 2005
MR HUGH BARRETT and MR MARTIN SYKES MR ELLIOT MORLEY MP, MR DAVID RABEY and MS JILL RUTTER Evidence heard in Public Questions 1 - 89
USE OF THE TRANSCRIPT
Oral Evidence Taken before the Environmental Audit Committee on Wednesday 30 November 2005 Members present Mr Peter Ainsworth, in the Chair Ms Celia Barlow Mr Martin Caton Colin Challen Mr David Chaytor Mr Tobias Ellwood Lynne Featherstone David Howarth Mr Nick Hurd Mark Pritchard Mrs Linda Riordan Emily Thornberry Dr Desmond Turner Mrs Theresa Villiers Joan Walley ________________ Memorandum submitted by Office of Government Commerce
Examination of Witnesses
Witnesses: Mr Hugh Barrett, Chief Executive, OGC.buying.solutions, and Mr Martin Sykes, Executive Director of Smarter Procurement, Office of Government Commerce, gave evidence. Q1 Chairman: Good afternoon. Thank you very much for coming. I understand you were a little reluctant to attend this meeting and I wonder whether you can explain why. Mr Sykes: We were never at any time reluctant to attend the meeting. We were awaiting instructions from our Minister, John Healy. We thought it was right and the correct protocol to give him the option, as Elliot Morley was going to attend this afternoon, to appear before you. I have been standing, waiting for his instructions on what he wants to do, and he could have been sitting here if that is what you had wanted. Q2 Chairman: We are very pleased to see you both, but you are not the people who gave us evidence from your organisation last time we took it. What has happened, and why are we meeting you today instead of Mr Fanning, Ms Turner and Mr Davies, who came last time? Mr Sykes: At the last meeting I was in Geneva and I should have been here but could not be. I hold the brief on this subject. Mr Fanning, who is the Deputy Chief Executive of OGC, stood in for me at that time. He was supported by two of my team, Ms Turner and Mr Davies. Q3 Chairman: There has not been any change in personnel. Mr Sykes: No, I just could not be here. This time, Mr Barrett is here - and perhaps I could say a few words by way of introduction of our role? Q4 Chairman: Please do. Mr Sykes: Mr Barrett is here because he can help fulfil some parts of the picture. Recognising that there are some new members on your Committee, perhaps I should say a few words about OGC. We are an independent office of the Treasury. Our brief is to work with public sector organisations to help them achieve efficiency, value for money, and improve success in the development of programmes and projects. We have two Ministers: on the efficiency front, the Chief Secretary holds the brief, but our departmental Minister is John Healy, the Financial Secretary. We have been given three targets within the SRA report period. The first is to deliver the efficiency agenda, and that is to improve public services by working with departments to help them meet those efficiency targets. The efficiency targets are to recycle administrative costs into frontline delivery, so this is not about reducing departmental budgets; it is about getting better value for money on what we spend. The second target is to help departments deliver value for money within central civil government, so that is a sub-set of the efficiency programme. That has been our historic remit. It is only when the efficiency programme came in that we took on the wider public sector remit. I should say that value for money is defined as the optimum combination whole-life cost over the life cycle of the product; it is not about the lowest cost. The third thing is to improve the success rate of mission-critical projects. As part of our role as procurement expert, we provide advice, guidance and support to departments. Our concern is always to ensure that procurement activity is consistent with the law so that we do not get infractions at a later date. My colleague here, Mr Barrett, is Chief Executive with Buying Solutions, which is our executive agency or trading arm, which provides procurement services to help public sector organisations get value for money; it actually deals with setting up framework agreements and trading arrangements from the centre of government, which are available to all departments. OGC is very supportive of and fully engaged with the work of the Sustainable Procurement Task Force. We are represented on the Task Force proper. I chair Working Group 2. Q5 Chairman: You are covering quite a lot that we are going to come on to in a minute, if you do not mind my interrupting you. When your colleagues came before us last time, they left us, frankly, unimpressed, and with the impression that sustainability issues were not really embedded in the culture of your organisation. Given the developments since then, not least obviously the new Sustainable Development Strategy, what action have you taken to remove the possibility that people might think you do not regard sustainable procurement as absolutely core to your activities? Mr Sykes: The first thing, and the most visible thing, that we have done is to make it very, very clear that we are supporting the Sustainable Procurement Task Force. As I said, I chair one of the working groups and I sit on the Task Force proper; and we have representatives of OGC working on each of the five working groups. In addition to that, we have been working since the last meeting with departments to help them with their elements of the sustainability agenda. We have been working with DWP to help them understand how they can deliver more effective race equality policy, using procurement. We have been working with the Home Office, helping them to provide a guidance note on how they can engage with the third sector. We have been working with DfES on how you can use procurement to promote youth employment and skills upgrading and so on. Q6 Chairman: Can you confirm that the annual procurement budget of central and local government is around £125 billion a year? Is that still the right sort of figure? Mr Sykes: The best information we have is that annual expenditure across the public sector with third-party suppliers is about £125 billion. Q7 Chairman: So anything that you do to improve the sustainable nature of your purchasing could have a massive beneficial impact, could it not? Mr Sykes: It is right to say that in the way we spend our money we can reinforce the sustainable policy aims. I chose my words very, very carefully - it is £125 billion a year of expenditure, so that is what is on the ledger. Of course, quite a few of the contracts that are in place are in place for seven to ten years, and in the procurement process, rather than working with those suppliers post contract, the number you can attract is something less than 125 million - but it is a big number. Q8 Chairman: When Mr Fanning came earlier in the year he explained to us that sustainability was interwoven through all your work. Would that explain why it is virtually invisible? Mr Sykes: I think to admit it is invisible would be a mis-statement of the fact. In all of the work that we do, we work with the lead departments on the elements of sustainability, because at the last count there were 22 different aspects of sustainability here. We work with departments and promote, when we are speaking at conferences, the idea of value for money including the sustainability agenda. Of course, different departments and different local authorities may have a different take on which of the 22 are their priorities. We have worked with the National School for Government, and we have now built in to the certificate of competence and graduate training qualifications that they do there for procurement people elements on sustainability. We are working with the Cabinet Office, who are putting together the professional skills for Government agenda, which is for the senior civil service, making sure that the addressing of sustainability within the whole procurement cycle, right from thinking about delivery and policy, is the right way to deliver the sustainability agenda in the long term. Q9 Chairman: Cost-savings and efficiency seem to be your main preoccupation. Is sustainability as interwoven as those concerns? Mr Sykes: We are not about cost-saving; we are about increased value for money. It is about getting more value. It is not about paying the lowest cost; it is about making sure that what we buy is fit for the purpose that you require. In that respect, there is no conflict with the efficiency drive. In his report, Peter Gershon made a number of references to making sure that the efficiency agenda did not undermine promoting the cause of SMEs and opening the government market for SMEs. He made references in there to third-sector organisations, and making sure that work should be put in place to bring them into the procurement process, because they are a very valuable part of the delivery chain. There really is not a conflict. What I would like to say about the efficiency agenda is that the really positive thing that has come out of it is that procurement is a conversation that is now taking place across the whole of the public sector. Where we were originally focused on central civil government, we are now engaging with the MoD, with the health trusts and with local government. In all of the conferences and all the publications that we put out, we consistently say that value for money is not about lowest cost; it is about providing long-term sustainable solutions. Q10 Chairman: In practical terms, who provides the leadership that is needed when some thoughtful procurer at DCMS or the DTI comes across that classic dilemma, which we discussed the last time the Committee looked at these issues; the trade-off between the cheapest option and the most sustainable option? Who helps that person, who is usually quite a humble body within a government department, to reach a decision? Mr Barrett: Can I use a real live example, which is around electricity from renewable sources? We buy electricity on behalf of many customers across the wider public sector. Some of it is brown and some of it is from renewable sources. Very roughly, 25 per cent of our customers elect to pay a premium of about 1.5 per cent to buy green electricity. The other 75 per cent decide that they would rather spend that money on other things. At the end of the day they have that choice, and it is a fairly clear choice. We try to explain to them the cost differential and what they are buying for their money; and they then make the choice. In practice it is obviously a very difficult judgment. The decision whether you buy electricity from renewable sources or invest it in frontline services is a very difficult balance; and 75 per cent of customers decide not to buy green electricity, or electricity from renewable sources, but 25 per cent do that. Q11 Chairman: It does not really answer the question as to who owns this problem. Mr Barrett: At the end of the day, it will be the accounting officer for the DCMS, as the person who ultimately had to convince him or herself that this was the right course of action. Q12 Colin Challen: Given your absolutely central role in providing advice to people in making procurement decisions, do you think it would help or hinder them if we had mandatory reporting requirements on businesses supplying government departments and so on - requirements dealing with sustainable development and environmental issues? Mr Sykes: If the reporting were against targets that were meaningful and clearly defined - and I said earlier that at the last count there were 22 different angles to sustainability here, so getting the balance right is difficult - and if you could define it in such a way that it did not create further bureaucracy in the procurement process, and therefore discriminate against small businesses and minority businesses and so on, there would be some benefit in it. I spent some time in a committee with Margaret Hodge on race equality the other day, and the case I put to her was that if you make it a condition of contract that people report on a frequent basis what their diversity is and so on, the big companies can cope with that because they have the resources to do it, but it is the small companies with only twenty people ----- Q13 Colin Challen: Has your advice on this issue been sought by your sponsoring department? With your practical experience, have they come along and asked you for your views, or the OGC's views on whether or not this should be a mandatory requirement? Mr Sykes: We would be consulted, and we are consulted, by the departments that have the policy leads on the various angles ----- Q14 Colin Challen: But your advice would be that it is possibly an attractive option depending on quite ----- Mr Sykes: Subject to proportionality, yes. Colin Challen: Quite a topical question. Q15 Mark Pritchard: Perhaps I misunderstood you; I do not think you were saying, were you, Mr Sykes, that the colour of somebody's skin necessarily determines their view or lack of view on sustainable procurement? I am intrigued by what you said. How did we move from sustainable procurement to ethnic minority procurement; how did you make that big leap? Mr Sykes: One of the 22 aspects of sustainable procurement is about race equality and about having a diverse community. Q16 Mark Pritchard: I do not have an issue with that, but on sustainable procurement do you think that there is some merit, perhaps a lot of merit, in having an environmental impact assessment as we have a regulatory impact assessment on government policy, irrespective of whether or not it is procurement policy? Mr Sykes: I think that if you really want to deliver sustainability that is the point at which you should do the environmental assessment at the development of policy or development of delivery. Then, if you provide clear guidance to the procurement people and the department on what your priorities and objectives are, they can design a procurement strategy, which can go as soon as possible to meet it, and then OGC would help the people in those departments put together a strategy that delivered the objectives that they want. Q17 Mark Pritchard: My final point is in relation to your earlier reply, when you said the accounting officer for DCMS or MoD or whatever would have the ultimate say: do you think that person is best placed, in perhaps a solitary position eventually, to make a judgment on what is best value, rather than what is on the bottom of the ledger sheet, which is perhaps where their training is best placed? For example, is it right that we are looking at more and more indirect levy related to climate change, and at the same time one of the biggest car pools in this city today is the Government car pool, which still does not have a sustainable bio-fuel or green fuel policy? It has in some cars but not all. On the one hand, Government is paying out money and on the other hand it has a very inconsistent policy on car procurement. That is just one simple example that is not joined up. That, in my view, with the greatest respect, is not, Mr Sykes, value for money, although to the accounting officer it might be the cheapest option. Mr Sykes: When we talk about procurement policy, OGC's lead is about compliance with the EU regulations, which are not a barrier in this case, and about compliance with the value for money. It is not OGC's job to tell people what they should consider to be value in the context of their business, or what they should buy. That is the accounting officer's responsibility. Q18 Chairman: Nobody advises the accounting officer! Mr Sykes: We can advise the accounting officer and his people on how to use the procurement process to meet their particular priorities and aims. We do not tell them ----- Q19 Chairman: They can ignore your advice. Mr Sykes: They can indeed, absolutely. Q20 Colin Challen: On your website you list your three priorities as being efficiency, savings up to £3 billion worth, and a fine phrase, "improving the success rate of mission-critical programmes and projects"; however, sustainable development does not seem to be listed as a priority. Indeed, it is buried in a link. Do you think that is a prominent place for it? Should it not be one of your mainstream priorities, along with the others? Mr Sykes: We have been directed by our Minister that these are our priorities, and those are the headline priorities. That does not mean to say that we ignore sustainability as part of delivering all of those things. Q21 Colin Challen: Do you sincerely not believe that some clear and concise expression of your new-found commitment to the cause of sustainable development should appear alongside those fiscal priorities? Is there something preventing you from putting it there, or do you have to do everything by ministerial diktat? Surely, it will not cost anybody anything to say, "and here is our fourth priority" because it does fit in with the general trend of government policy? Mr Sykes: I think I need to go back to my board and ask for an answer on that question. I would say that in all of the communications that we make on all of these agendas, we consistently mention sustainability of the solution as part of what is required. Q22 Colin Challen: Would you ask your board to ask the Government for their permission to add another PSA target that specifically targets your new sustainable development aspirations? Mr Sykes: I will ask. Q23 Colin Challen: There does not seem to have been a lot of progress on the Sustainable Solutions website. Why is that? Mr Barrett: The Sustainable Solutions website, which is a pilot site that OGC.buying.solutions is running is being developed by a group of people in the Manchester Business School. The next release of the site will be coming out in February, so until that appears you and anybody else viewing it will not see great enhancements. It is simply a function of the time it takes to deliver the new functionality. Q24 Chairman: It is up there, in the public domain. Mr Barrett: The site is, indeed, yes. Q25 Chairman: I looked at it the other day. I was interested in the case studies that you put on there. I do not know whether you have looked at it recently - have you? Mr Barrett: I have looked at it recently but I cannot say that I am going to be completely au fait with all the case studies. Q26 Chairman: You might like to familiarise yourself with what is there because if you go on to the first case study you get this: "Epsum factorial non deposit quid pro quo hic escorol. Olypian quarrels et gorilla congolium sic ad nauseum" - and so it goes on! It is copyright 2004. Mr Barrett: That is obviously not something that we want to continue with. We will sort that out. I imagine that is probably in Greek, or it may even be in Latin. We need to sort that. Thank you for pointing that out. That does not give, though, a very good message - you are absolutely right, Chair. Q27 Chairman: It does not tell me that you are treating this as a priority, which this Committee thinks that it should be. Mr Barrett: Thank you for bringing that to my attention. We will sort that very quickly. Mr Sykes: Can I add to what Mr Barrett has said? On the guidance side, on the OGC website, we have now got a sustainable procurement section. That brings together links into all of the guidance. We have a lot of guidance on the site that refers to sustainability, including ----- Q28 Chairman: That is in English, is it? Mr Sykes: Yes, it is. This includes something that I think was published around the time of the last Committee, which is the 11th and final section of the Achieving Excellence in Construction guidance, which is sustainability in construction. As well as providing very clear guidance into the areas that are of interest to the reader on sustainability, there are also punch-out links to other sites like the SDU and so on, where they can find other advice that is outside OGC's realm. Q29 Colin Challen: It may be argued that the Gershon agenda could lead to some sustainable decisions being made, and it could lead to some unsustainable decisions being made. Despite the fact that it would appear to be blind to that kind of outcome, do you think that the real pressure will be to lead to more unsustainable decisions being made, as the priorities that you have listed do not really include sustainable development, as you have accepted this afternoon? Mr Sykes: I am on the optimistic side. I think the fact that we now have a conversation in government which is about procurement, which has been promoted by the Gershon agenda, the fact that a lot of departments and organisations, which never thought it was important to have professionally qualified procurement people in their organisations, are now recruiting, gives us a better chance to include intelligent decision-making. Q30 Colin Challen: Is it really a matter for a conversation? Can we not just tell people that they have to do this; that it is a priority and must be done? It is not about a conversation - "maybe we will, maybe we will not". Surely your advice is, "you have to"? Mr Sykes: It is not as black and white as that. Within the EU regulations, the new regulations that become law in January, there is far more scope to take forward sustainable and green considerations in the procurement process. That is being rolled out through training packages to organisations. We can tell people, "you must think about sustainability as part of your procurement decision-making". The difficulty is, as I said, that there are 22 different angles to procurement, and understanding which are the priorities in your piece of business is something that the businesses have to sort out. From my point of view, if we could have help from Ministers and from Members on what exactly are the relative priorities of those 22 issues, it would be most helpful to people who are trying to make procurement decisions. Q31 Colin Challen: Since our last inquiry has any progress been made on whether departments will be able to take into account non-cashable savings? Mr Sykes: Taken into account as what? In what? Q32 Colin Challen: In coming to their decision. They may get a very quick saving, if they are using the Gershon definition of cashable savings. That may weigh very heavily on their minds. The non-cashable savings are perhaps a little more cutting-edge, a bit more airy-fairy; and therefore if they are not required to take those into account perhaps they will be dismissed; but in the longer term they could provide a better result. Mr Sykes: I think there is absolute scope for people to take into account defining value in terms of the business they are trying to deliver, and they can count those as part of the efficiency gains. Q33 Colin Challen: It is proving very difficult, is it not? Are there things you can do to make it less so? Mr Sykes: In some areas it is easier and in some areas it is difficult. We are trying to identify more and more case studies of good practice. Writing guidance is all very well, but actually showing somebody that it has been done this way before, and this is how you can do it, is far more helpful. The sustainable procurement task force includes providing advice, guidance and skills to organisations. We will be looking at this and we will be looking at four more case studies. Q34 Mrs Riordan: I am told that from the moment of purchase, whole-life costs are measured, but you are not allowed to take into account the costs incurred before this. Does this mean that the potentially high environmental costs incurred by a product prior to purchase could not be taken into account when assessing whole-life costs? Do you think that is acceptable? Mr Sykes: I do not think I can answer this one at the moment and would like to take it away, consider it and find an answer. Chairman: If you could write us a note on that, it would be very helpful. Mrs Riordan: This Committee was told during the timber inquiry that, "there is an underlying principle that public procurement should not be used to pursue secondary policy aims". Where does this put the Government's sustainable timber policy? Q35 Chairman: The Committee has been running a sub-committee, which has been looking at the question of sustainable timber. We were told at one of our recent sittings what Linda Riordan has said: "There is an underlying principle that public procurement should not be used to pursue secondary policy aims." If that is the case, surely it does not just affect timber but the entire ability of public procurement to deliver a sustainable agenda? Mr Sykes: The fundamental principle in procurement is value for money, as I keep repeating, on a whole-life basis. If the procuring authority considers that there is value in building sustainability into the value definition, there is no reason why they should not do it, as long as it is not done in a discriminatory way. For example, specifying a particular supplier's product or specifying that a product must come from a particular country or must not come from another country cannot be included in the considerations. But if the procuring organisation believes that value can be derived that is over and above the primary function - for example, if one bidder is proposing to create jobs in the East End of London and it is considered that that would be beneficial to the cause of that particular authority, then there is no reason why they should not take it into account. I think that with intelligent consideration it should not be a problem. Q36 Mr Caton: Can we move on to what I think is the rather confusing question of the Government leads on procurement and sustainable procurement? On your website and elsewhere you make it clear that you do not lead for the Government on sustainable procurement; in fact you do not say who does. Does this make sense? Mr Sykes: I think it does, because I keep coming back to the 22 policy issues. Different departments have been set up to drive the cause in different sustainability issues. It is not OGC's job, and could not be OGC's job, to lead on those particular interests. The idea that there is a sustainable procurement policy other than value for money - what is sustainable procurement? It is the policy aims which lead to sustainability, and we are about, "if that is what you want to achieve, how can we make sure that you, in a legal way, work within the rules to achieve your aims". We are here to help people understand how they can achieve their policy and delivery outcomes. We do not lead on which aspects of sustainability ----- Q37 Mr Caton: Clearly, the main emphasis of this Committee is on environmental sustainability, and certainly from what we have heard from you so far, environmental sustainability seems to be fairly peripheral to your role. One just wonders if this dichotomy between your function in procurement and Defra's in sustainable procurement is part of the reason for that peripherality. Mr Sykes: We work very closely, and increasingly closely, with Defra, to help them deliver on the green aspects of sustainability. As I said earlier, we work very closely with DWP on their view of what sustainability means, their agenda. We work with DfES and with other departments. There is no clear ministerial guidance to OGC on whether we should treat environmental over equal opportunities or employment of youth and upskilling of youth. We are here to help everybody, in the best way possible, to use procurement, where it is allowable, to deliver on their particular policy drives. I do not think we have put the green agenda on the periphery of all of this. I would say we probably have more OGC resource working with Defra at the moment on the Sustainable Procurement Task Force than we do with any of the other departments. Q38 Mr Caton: Is the logic of what you are saying that, for instance, sustainable transport policy should be transferred from the Department of Transport and put into Defra's area of responsibility? Mr Sykes: I think that is a question that it is not for me to answer. Q39 Mr Caton: A lot of people would think that that would be a sensible solution. Mr Sykes: All I can do is say that we are working with the Sustainable Procurement Task Force. It will make recommendations when it produces its report. If at that time Ministers decide that OGC should have a more leading role in this, then OGC will be told that, but at the moment we treat departments with equanimity. We help everybody to interpret the procurement policy in the way they want to interpret it. Q40 Mr Caton: The Sustainable Solutions website has already been mentioned. Apparently it states there that OGC.buying.solutions is an executive agency of the Office of Government Commerce in the Treasury and is taking the lead in sustainable procurement. Have you told Defra? Mr Barrett: That is certainly not meant to be the policy lead, but we are certainly leading on some sustainable initiatives, for example in work we are doing at the moment on putting in place some travel contracts, we are working very heavily with Defra to ensure that things like carbon offset are taken account of in our procurement. In terms of our recently re-competed furniture contracts we are building in provisions to make sure that we are only using timber from sustainable sources and so on. Those are the things we are referring to. It would probably be more precise to say we are taking a leading role. We are certainly not aspiring to lead in the policy sense. Q41 Mr Caton: You are sending out mixed messages. Mr Sykes: Might I just add to that? I think OGC is at the forefront of implementing some green policies within its own environment. For example, in refurbishing and reallocating space within our own buildings we have so far vacated two offices in London. We are making better use of the building. In doing that refurbishment we have used timber from renewable sources; we have used waterless urinals; we have used low-energy light bulbs; we have used systems which hold half as much water as normal. The whole strategy of developing our very small estate would set an example to many, many organisations about what you can do. I do not think there is an issue here that we do not believe green is important. We have also installed in our offices in Norwich, Liverpool and London video-conferencing facilities. I have in the past month done thirteen hours and ten meetings by video conference so that people in Norwich do not have to travel into London to meet me, and I do not have to travel there. I would just like to make the point that we do believe this is important; but green is not the only important thing that we have to work on. Q42 David Howarth: We have the NAO's report in September and your memo to us. There does not seem to be any reference in your memo to the NAO's report, so can I ask you what steps you intend to take to implement the page and a half of recommendations from the NAO to the OGC? It is the NAO review of sustainable procurement in central government this September. It says things such as the OGC should amend the gateway review process, and include sustainability considerations in procurement guidance to the Department. Mr Barrett: The normal process, as I understand it, is that there will be a Treasury minute at some stage, in response to the NAO report. Q43 Chairman: Have you read the NAO report? Mr Barrett: I have indeed. Q44 Chairman: That is a relief! Mr Sykes: On your particular point about the gateway review, the gateway review process already has sustainability built in to key stages. The review team leaders are required to check whether sustainability type issues have been considered as part of the procurement process. That is not the complete solution to everything, but we do try and include that. Q45 Chairman: That was the last question. Thank you for coming along. We may have some further questions and put them in writing. Mr Sykes: We will find answers to the questions. The Committee suspended from 3.32 pm to 3.50 pm for a division in the House Memorandum submitted by Defra Examination of Witnesses
Witnesses: Mr Elliot Morley, a Member of the House, Minister of State, Climate Change and Environment, Mr David Rabey, Head of Procurement, and Ms Jill Rutter, Director, Strategy and Sustainable Development, Department of Environment, Food and Rural Affairs, examined. Chairman: Thank you very much, Minister, and to all three of you for coming here. Q46 Mr Hurd: Do you think that as far as most Government departments are concerned Gershon is now more relevant to procurement than the Sustainable Development Strategy? Mr Morley: There should be no contradiction between the Gershon objectives and sustainable development and sustainable procurement. In fact, in many cases, there are examples - and the Environment Agency has some good examples - of applying whole-life costing. The Environment Agency responsible for pumping out the Wheal Jane mine in Cornwall purchased the most expensive pumps on the market for that job. In the lifetime of the pumps they have had lower running costs and they have lasted longer than some of the cheaper pumps that they could have gone for. On a whole-life assessment they have applied costs in applying a more sustainable approach than going for the cheapest option. Gershon is an important agenda; it is important to us in Defra. We are well on target for achieving our requirements under Gershon, but we can demonstrate that we take the issue of sustainable procurement very seriously in our own department; so there should not be a contradiction on this. Q47 Mr Hurd: Is not the whole culture of the Gershon report about short-term cash savings, reducing the cash cost ----- Mr Morley: Not necessarily. Gershon is about saving money. You can save money with a whole-life assessment just as easily, and perhaps more sustainably, than you can by going for the cheapest option. Q48 Mr Hurd: Can I bring you to what appears to be the traditional Treasury rule of not using procurement to achieve other policy objectives, for example environmental objectives, which is what we heard in the sustainable timber review. Is this not exactly what is happening in terms of sustainable timber procurement? Mr Morley: Not achieving these objectives or achieving them? Q49 Mr Hurd: We heard in evidence that it was Treasury policy that procurement should not be used to achieve other policy objectives, but the sustainable timber policy appears to fly in the face of that. Mr Morley: I can understand the point you are making, although there are some aspects of our timber purchasing policy that are quite legally complicated, for example taking into account the rights of indigenous people. There are arguments in terms of the legal advice we have received from the EU procurement rules that we cannot do that. However, there are some counter arguments, which I am sure will not be unique to you, Chairman, that sometimes lawyers will give you completely conflicting advice on issues. We are in the process of trying to clarify this issue in relation to the legal advice. In terms of objectives, our key objective with issues like sustainable timber is that, first of all, we want it to be legal. That is a legitimate and completely defensible policy. The second issue is that we want it to be sustainable, which means we want it to come from sustainably-managed forests. I know that that is not strictly speaking a financial objective, but it is part of our commitment, as laid out in our Government strategy, Securing the Future, for sustainable development, for sustainable procurement. I would strongly argue that policies such as our timber strategy are entirely defensible and consistent with our overall sustainable development policy. Q50 Chairman: Can we come back to the principle about whole-life costings. As I understand it, the whole-life cost exercise only starts at the point of purchase; it does not take into account environmental considerations, for example that may have occurred before the point of purchase. Mr Morley: There is no reason why it should not, and there is no reason why we should not work that into the supply chain. It is fair to say, Chairman, that in terms of developing our strategies these are new approaches and they do need some work on these areas. It is why we have the Sustainable Procurement Task Force, chaired by Sir Neville Simms, because he has a number of working groups looking at a whole range of issues including the supply chain issue. Q51 Mr Hurd: Most people around this table would agree with you about the sustainable timber strategy, but the point I was trying to clarify is whether there is a Treasury rule that procurement should not be used to achieve other environmental objectives, and ask whether you agree with that in the context of the fact that the public sector spends £125 billion a year. There is a huge opportunity cost in terms of driving forward the sustainability agenda. Mr Morley: I am not aware of a rule quite as hard and fast as that. We clearly have to have our overall Government objectives, which is why we work within the broad framework of our sustainable development strategy, which is agreed by all parts of Government, including the Treasury, which signed up to that. I should say, Chairman, that I am accompanied by David Rabey and Jill Rutter from my Department. I do not know whether they would like to comment on the Treasury position - or it is dangerous for me anyway! Ms Rutter: I hope it is not too dangerous. The Sustainable Procurement Task Force is jointly sponsored by Defra and the Treasury. I would have thought that if the Treasury were going to take the line that it did not accept that there was something around sustainable procurement, it could have quite easily said it did not want to jointly sponsor the Sustainable Procurement Task Force. They are participating in the Task Force. Mary Keagan, one of their MDs, sits on the Task Force; they are active in working groups, et cetera. Q52 Mr Hurd: Can we expect, for example, a sustainable aggregates task force, or a sustainable food procurement task force? Is the principle now open? Mr Morley: The principle of a sustainable approach applies to all our dealings, which includes with aggregates in relation to environmental impact assessments and the aggregates levy. These policies are already influenced by our commitment to sustainable development. Q53 Chairman: I have been trying to refresh my memory as to who it was who told us during our timber inquiry that "there is an underlying principle that public procurement should not be used to pursue secondary policy aims" - and I am reliably advised that it was you! Maybe we should be hunting around the Treasury to find the answer to this question. Mr Morley: I can explain that, Chairman. I am just trying to think of an adequate one! It is back to the legal ruling that we have had some argument with. To be honest, it is not so much Treasury; in the case of timber it was more to do with the EU procurement rules. Q54 Joan Walley: You mean in respect of contracts over a certain limit, so it could apply to those under that limit that is required by the EU procedure? Mr Morley: Yes, it is contracts that fall within the level that you have to open up the tender within the EU. Q55 Chairman: Can you kindly send us a note on this? Mr Morley: I would be very happy to do that, Chairman. Mr Rabey: Government accounting requires that the over-arching policy procurement is value for money. Value for money equals whole-life costs. The current procurement rules allow a considerable degree of latitude to departments to consider environmental social issues. The issue of indigenous peoples in timber is particularly important because it runs into issues concerned with the International Labour Organisation. That is the reason why legal advice is being sought. Q56 Joan Walley: In terms of the evidence to the Committee it has been put to us that there are always premium extra costs involved with sustainable and legal timber. The difficulty is that that cannot then be reflected in the procurement policy, that those proper costs that are connected with taking that better job to get the legal sustainable timber cannot be reflected in the procurement policy; then it is unaffordable. That is the issue. Mr Morley: It can be reflected in a sense because the number one priority with our timber purchases is that it should be legal. It is an undeniable requirement, and so a strategy which is developed around the concept of buying legal timber I do not think transgresses any rules. It is certainly supported by the Treasury in that approach. Q57 David Howarth: Can you write to us about the legal position because I do not think it is clear, because the EU re-interpreted its own rules a couple of years ago, with its Buying Green Handbook; so I am not sure whether the EU is the barrier. The ILO might be a barrier but I am not too sure how because its rules are usually protective of labour rather than getting in the way of trade. There might also be the WTO in here somewhere. Mr Morley: There is a WTO implication on this, so we are very happy to do that. Mr Rabey: We are awaiting a note from the Treasury on social issues in procurement, and it is a sensitive issue. As a Government Department, we know there are 49 countries in the world that are not classified as free under various international labour conventions. We are hoping for some guidance from the centre as to how we might interpret that in public procurement in the future. Q58 Lynne Featherstone: At the moment in any procurement decision in Government it is probably difficult enough already to get whole-life costs considered as opposed to capital costs; so is it realistic to think that in the current short-term cost-driven, context of Government we can ever actually move on to a better way of real costs, taking properly into consideration viability or sustainability? Is it realistic, or is it pie-in-the-sky? Mr Morley: It is not just realistic, it is happening now. The question is on the assumption that the whole Government procurement strategy is always based on the cheapest cost option; but that is not the case. The Treasury itself acknowledged the concept of whole-life costing. They acknowledge that and accept that that is a perfectly legitimate concept to apply in relation to procurement policy and procurement strategy; and the logic of that is that you may not be buying the cheapest goods or acquiring the cheapest services in the short term, but in the longer term they are more sustainable and you get some cost advantages. I did mention the last time I was here that we have just completed our refurbishment of Defra, where we have paid a premium in relation to the quality of the refurbishment, the insulation, the materials and the wood, but we can quite confidently demonstrate that over the life of the costing, then you get a good return. We have just done that. The rules do not preclude it. I think it is fair to say that if you look at the whole structure of government and if you include local government, when you have a system that is rooted in the past ongoing for the cheapest of costs, then it takes time to change that mindset. That is why the OGC have been running capacity-building on this; it is why we have had training sessions. We have to make sure that everyone in the buying system within government is aware that whole life costing is a perfectly legitimate method to apply. Q59 Lynne Featherstone: That message seems to be really slow in getting through. I wondered if you had any ideas to help government break out of the traditional pattern of short termism in terms of costs so that whole life cycles could be better incorporated into the system. At the moment, and having sat here today in particular listening to the first hour, it does seem that it is not happening at a pace one might recognise, even if you were a shining example. Ms Rutter: One of the working groups in the Sustainable Procurement Task Force is looking at the issue of taking the whole life costing guidance. The guidance says you should do whole life costing. It is looking at the issue of how you make this easy for people to do. That is being addressed through the task force. We hope that is going to be very productive. Could I point the committee to two other initiatives that I think should help change perhaps some of the biases in the existing system? First, under the framework for sustainable development on the Government estate, every government department is being required to produce its own sustainable procurement strategy. Those are being published imminently, in December or January. Secondly, every government department, and even the OCG as well as an independent office of the Treasury, is producing its own sustainable development action plan. You will recall that in Securing the Future (of the UK) as a strategy, we have said that we, Defra, will stop reporting government progress. We are giving that to the Sustainable Development Commission under Jonathan Porritt to report - I think the committee will find those reports very interesting - on how Government is getting on. The first way in which we are doing this is, rather than have a Defra commentary on the sustainable development in government questionnaire that we did to see what progress we have made over the last year on the framework targets, to publish that with a commentary by the Sustainable Development Commission in mid-December. We think that these will change the incentives. Increasingly, individual departments will be held to account for the extent to which they are genuinely applying the principles in the Sustainable Development Strategy. We are very keen that we make clear that it is for every department to take on board those principles and show how they apply them through both the operations and policies of those departments. Mr Morley: We have been applying the whole life costing. We do have a very strong sustainable agenda in relation to our own procurement within Defra. We have our own toolkits for our divisions and our own purchases on whole life costing, which are available within the department. We are developing our toolkit for the Government. We will make that toolkit available to give guidance on it. 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 than 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 of 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 SDC strategy, we set out the aspiration of being a leader 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 be looking on the structure. It is interesting that on some of the social issues, 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 per cent from renewable sources. In fact, in the Defra estate around the country, the figure is about 80 per cent 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 be come a point where a statutory standard 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 per cent. Woking also entered into an alliance with the energy companies on the energy efficiency requirements commitment, the so-called EEIC. 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 EEIC 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, 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 per cent, Denmark at around 40 per cent; we were at 22 per cent, only 3 per cent 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 cross-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 per cent compared to 22 per cent. 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 LGAs, 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 half-way point. At the moment, it is very much in the data-gathering state. 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. Q80 Mr Ellwood: Could we turn to the National Audit Office review? First, may I ask your reaction to the review? Will there be any formal or indeed informal response by yourselves? Mr Morley: We very much welcome the review by the National Audit Office. It is useful to have this kind of analysis in relation to the performance of Government, where we have had some successes and where there are still some weaknesses. In any kind of approach towards sustainable procurement, you do need some form of auditing. You do need some kind of assessment about how well you are doing. In fact, your own committee, Chairman, has a very important role in this and that is why I very much welcome the interest that you have in this. We do need to benchmark our own progress towards these targets. The NAO report is very helpful in this. I am not sure we do a formal response to the NAO report; it is more guidance. Ms Rutter: As for what we are actually doing about this, obviously this is an input into departments producing their sustainable procurement strategies, taking into account the way departments are approaching that. We are very good consumers of the NAO report because it has gone to every member of the Sustainable Procurement Task Force with the statement that these are the questions that people in the know are asking about the Government and these are the issues that the task force needs to address in its work. We see it as very much driving the agenda. There are some areas where we have already taken account of some of the comments. I know you have picked up the point made earlier about the greening of government report and the rather duff nature of some of the questions that we asked in the SDiG report like, "Do you have a commitment to do something?" and not, "Are you actually doing any of that?" This year, hopefully the questionnaire has picked up some of those points and will yield up more meaningful answers than the "yes" and "no", which did not tell anyone about how much you are doing it. We have already put into action some of those things. We very much see the response to this coming through both the task force action plan and then the way in which ministers and Government responded to the action plan. Mr Rabey: The NAO and Defra recently held a workshop for 20 government departments on sustainable procurement. The departments were invited to reflect on the fact that the sustainable procurement agenda is here and visible and that they will be held accountable. Q81 Mr Ellwood: That is very helpful. Could I suggest that it might be helpful to have a formal response? You mentioned the SDiG questionnaire. Comparing that with some information that was gleaned from the National Audit Office review on the number of departments that were claiming that they were undertaking environmental risk assessments, according to your study four were not; in fact, 11 were not. If we look at what was actually being done about the data itself, it seems also that there is a discrepancy there and one department said they were not doing anything, whereas in fact 14 departments had no real commitment to do anything more than collect the data. These seem to be huge discrepancies between the information that you are collecting and what the NAO is suggesting. Would you like to comment on that? Ms Rutter: This is the 2004 report. We have just been through the process of collecting the data for the 2005 report. As I said to the committee earlier, those results are being analysed by PriceWaterhouse, the consultants we used last time to do that. Then those are going to be commented on as to what this means in terms of performance by the Sustainable Development Commission. Hopefully, we have taken on board some of these points about the discrepancies and some of the meaningless questions that we asked - perhaps not meaningless but not very useful ones. The other thing that is going on in parallel is that we are reviewing the framework on the Government estate to ask how useful it is and whether it actually driving up government performance. I think this goes to some of the points made earlier. How do we actually make this something? We have set up, in order to do that, a sub‑committee chaired by the Minister, who is overseeing the process at ministerial level. I think I can mention that. We also have, and this is a deliberate and new innovation to oversee the framework review, the rather unfortunately named SOB (Sustainable Operations Board) chaired by the Second Permanent Secretary in the Ministry of Defence, That has all of what you might regard as the big footprint departments on it: the Department of Health, DFAS, the Home Office and whatever. They are overseeing the framework and asking how we make this into something that does not just set loads of little micro targets that may be focusing in some cases on things such as cars, mentioned by one of you earlier, focusing maybe on the wrong things, but genuinely stretches and drives government performance in the future. That review is going on at the moment. We hope that, as we roll forward the framework, it will become a much more powerful tool to drive up government performance across the Government estate. Mr Morley: Recently I had a meeting with EESD, which has ministers on it from every government department. I did draw their attention to the report of the NAO and the issue of data collection and data capture, which has not developed as well as it ought to have done in every government department. In fact, we did it ourselves with such things as the Government's policy on carbon offset for all government travel. We need the data on travel in government departments, the number of kilometres travelled, so that we can do a carbon equation and therefore do a cost for the department to put into the pot for the carbon offset. Q82 Mr Ellwood: To stretch that point, if there is such a discrepancy between what you are saying through the results of your own questionnaire and what the NAO is saying, it is very difficult for us, even though you have spoken with a lot of passion today about initiatives that are going on, when we see that departments are either doing very little at all beyond data collection or they are confused about the definitions themselves that you put forward to them. If we are to have faith in the sustainable project that you are pioneering, the departments must first understand what is expected of them and make a huge improvement in how the data is collected, and then what is done with that data once it has been analysed. Mr Morley: I do not disagree with that at all. I think it is true that I am very proud of aspects of what we have achieved in terms of sustainable procurements. I am totally committed to driving this issue forward. I would be the first to accept that we have not got this system up and running in the way that I would want to see it across the whole of the Government estate. That is the challenge for me; it is a challenge for us in Defra and working with my colleagues in other departments. I think we can respond to that challenge. In relation to the formal response, you do have your own report on the greening of government in 2004. We will, of course, be making a formal response to that because we do respond in a different way to select committees than we would to the NAO, for example. You will get a detailed response in relation to the points you have raised on this report. Chairman: I am sure most people would say the data is out of date. That is, unfortunately, a fact of life. Q83 Joan Walley: In respect of the challenge you have just spoken about, we, you, no-one can rise to that challenge without trained people to make it happen. I would be interested to know how many people there are right the way across the various departments you are dealing with on this in terms of people you are training. Are you satisfied that the training is in place? Do you know about how much training is being done? Do you have targets there, even if they are not official targets? Does that mean enough action quickly enough? Is that making the whole policy deliverable? Mr Morley: It has certainly upped the agenda of every department. We have engaged the OGC. You have mentioned the joint Defra/OGC conference, which is all about sustainable procurement. That is an awareness-raising issue in itself. There is certainly an issue of capacity-building in relation to our approach. We have to ensure that there is adequate training and experience for staff in all government departments. We look to the OCG to provide support for that and to the Sustainable Development Commission. Q84 Joan Walley: How would you know that enough was being done in a concerted way? Are you just leaving it to the OGC and hoping that they are doing it? Mr Morley: The OGC does a lot of work on this area. Clearly, we do need to take an overview on this. Mr Rabey: We have been working with NHS PASA (Purchasing and Supply Agency for the NHS) in terms of sustainable procurement training for the NHS. We have met our Part F target for training and we have already trained staff within Defra. That training is ongoing. The process is ongoing. Part of the training involves helping people on how to do sustainable things within that procurement process as opposed to issuing some guidance. Picking up the previous point about the figures on energy efficiency, taking the lessons from timber and food over the past few years, departmental failure to show commitment to sustainable procurement will become increasingly visible. Government departments will suffer that reputational issue if they are not seen to be doing something. A lot of effort is going into training, into education skills, both with the University of Bath and the National School for Government. We have to carry on rolling this process out over the next few years to ensure we meet the 2009 target. It is just having to touch a lot of people on the ground who do procurement. Q85 Joan Walley: I would be interested to know how much that has been done with Treasury. Certainly my own experience has been that where, for example, PFI proposals have gone forward which have involved procurement, their interest in this green sustainable agenda has not necessarily been matched by the people in the Treasury who will determine whether or not the package is allowed under Treasury rules? Mr Morley: We do need to green-up PFI contracts. The Treasury is not necessarily against this; it is partly about making sure that, in relation to criteria of the PFI, sustainability is built into that. In relation to capacity-building, the School of Government has held a session on sustainable development, which includes procurement, for ministers, including Treasury ministers; right across the board. Q86 Mr Chaytor: The impression our committee has, and this is the second time we have looked at the subject, is of a massive task force, action plans, strategic plans in departments, sustainable procurement plans, toolkits. It is seven years since Kyoto. During this time, the Government Chief Scientist simply goes to Number 10 and lobbies directly for a levy on electricity bills to finance the expansion of nuclear power. Does that not highlight the problem we have? Is it not down to this division of responsibility between Defra and the LGC and the distinction between procurement and sustainable procurement? Seven years have been lost and other actors, particularly in the energy scene, are developing their agenda in a much sharper and more focused way. Mr Morley: I start by cautioning you about everything you read in newspapers as to what the Chief Scientist has or has not allegedly done on these things. There is an enormous amount of activity going on. You are trying to change a culture here, I would say, and you do not change a culture overnight. You have to do a great deal of work and have strategies, training and capacity-building. We have a whole range of targets on the Government estate, which has been in for some time in relation to purchasing, recycled paper, renewable energy, all for efficiency. These efforts are relatively successful, but we want more than that. The idea of using government procurement as a sustainable tool is a comparatively recent concept. Of course, it is rather a new concept whereby you are trying to put in place an overall strategy as to how you use that enormous purchasing power than can really influence contracts, business, even whole industries. It has not been done before, nor is it simple. You have to do the background preparatory work. Like many things, it is frustratingly slow but you cannot short‑circuit it; it has to be put in place if you want to make this policy work. Q87 Mr Chaytor: What are the three things that you would most like to see appear in the Sustainable Procurement Action Plan? Mr Morley: One, I would like to address the whole chain of supply; two, I would want to see very good standards applied in relation to things like building, energy, water supply, local procurements and equality; and, three, I would want to see a strategy that people understand across the Government estate, and in fact beyond the Government estate and into other public sector areas and into our agency areas as well. Those are the top three I would like to see. Q88 Mr Chaytor: But not CPA (Comprehensive Performance Assessment) indicators for local authorities? Mr Morley: You do need to incorporate those within those indicators as well. Q89 Mr Chaytor: I am sure you have looked at the Early Day Motion 1065 in my name that deals with standby power. Given that the LGC earlier made it absolutely clear that whole life costs can be included in value-for-money definitions and given that the waste of energy through electrical appliances on standby power is such an obvious saving to be made, why have not we done more to specify the purchase of low standby electrical appliances throughout the public sector? Mr Morley: We do specify purchases of low energy appliances but the issue you raise goes much wider than that. The whole issue of standby power consumption is really so poorly developed that it is very difficult to know what appliances you can buy in relation to their power consumption and their standby power consumption. What we need on this issue is labelling and eco labels in relation to standby power and better design in relation to electrical equipment. We are trying to address that through the EU because, of course, it is an EU issue in relation to that. In order to be effective about this, and this is an important issue because huge quantities of power are consumed on standby, we also address it by strategies within departments. I can only speak for my own in that we do have policies to ensure that people power down computers in the evening so they are not left on all night within the department. We need that information and better labelling. That is not just important for the Government's purchasing policy; it is important for consumers as well. Chairman: Thank you all very much indeed. |