Examination of Witnesses (Questions 120
TUESDAY 12 DECEMBER 2006
Q120 Judy Mallaber: Why do you think
that will benefit our manufacturers?
Ms O'Grady: The experience of
other EU Member States has been that where the parent companies
are nationally based they tend to know the local area better and
what the concerns are and take an active interest in what will
be the procurement needs of the government or local authority
in five or 10 years' time. These are models that have already
been put out by Transport for London and are principles agreed
by the, Olympic Delivery Authority, and so on. This is to do with
having a bit of imagination and commitment.
Q121 Judy Mallaber: I return to the
questions asked earlier by Mr Bone in relation to other EU Member
States and state aid rules and whether or not we are being fair
to our own industries. Whenever companies grumble that they have
not got contracts and other companies have benefited from the
actions of their own governments one asks for the evidence because
one cannot really argue that there has been anti-competitive behaviour
without the evidence. What evidence do you have that they are
interpreting the rules differently from the way we interpret them?
You also referred to looking at it creatively. I can give one
example where it is known that they could have used arguments
to do with raw material. You have talked about the Cooneen Watts
& Stone example. I am sorry that Mr Hoyle is not here now
but I know that he took part in an Adjournment Debate on the matter.
We know that that was a particular area where a very rigid view
was taken in this country. How much evidence do you have that
other European countries use the state aid rules in a very different
way from the UK?
Mr Page: The Wood review set out
the conclusions on this and found that the breaking of procurement
rules happened very rarely, but it talked about grey areas to
do with history and culture.
Q122 Judy Mallaber: The problem is
that it is very vague and it is not sufficiently pinned down for
us to be able to say that it is unfair and we have been robbed.
That makes it quite hard for us to be able to argue the case or
take it up under the EU rules.
Ms O'Grady: Frankly, I do not
want to stop the French doing what they are doing; I want our
government to be as committed to developing quality jobs and opportunities
here. This is not just a case of ownership; it is a case of decent
Q123 Judy Mallaber: That is very
vague and does not help me in terms of exactly what the government
should do other than say that it would like to give a contract
to so and so. What are the grounds on which it can do it? We have
just had a reference to cultural factors.
Ms O'Grady: I would be very happy
to share the practical principles and protocols out there. Many
local authorities have been more forward-looking than central
government. Transport for London, the Olympics and their approach
are all very positive. It is about making commitments to apprenticeships
and vocational training within contracts, for example.
Chairman: If you have some hard-edged,
practical examples it would be good to have them. You quote the
Olympics in your evidence to us.
Q124 Mr Binley: The whole OJEC notice
scenario is, I believe, totally open to corruption. I wonder whether
you are making any overtures about that particular process. I
think that the whole tendering process under OJEC very often favours
specific companies of a particular size. It is not very user-friendly
for those who do not have permanent experts employed in the business
of tendering. That is my concern about the whole European approach
to procurement. Do you share that concern?
Mr Page: The general point is
that procurement ought to be less bureaucratic, more streamlined
and done in a way that allows a wider range of companies to apply.
If you imply that the OJEC rules prevent that then we certainly
would have no objection to making such a proposal.
Chairman: To be clear, we are talking
about the Official Journal?
Q125 Mr Binley: Yes. My concern is
that they are made specifically to be exploited in particular
areas by certain countries. I do not see a level playing field
there, although it purports to be one. Do you have any experience
Mr Page: We do not have any experience
of that specific issue. There is the "warlike" point
that we make in our written submission. There are specific procurements
that fall under the category of "warlike procurements"
and do not need to be open to tender for reasons of national security.
Given the very few number of military procurements that appear
in the Official Journal, it suggests that companies give
military procurements to their own defence companies.
Mr Binley: I am delighted to say that
most companies that I come into contact with do not make weapons.
Q126 Chairman: Mr Page, are you suggesting
that, for example, the procurement of boots is being treated as
a warlike procurement by other Member States?
Mr Page: That was the point we
made in the context of the Cooneen Watts & Stone procurement,
which was the example to which Judy Mallaber referred.
Q127 Judy Mallaber: In that case
the Ministry of Defence wanted it as cheaply as possible so it
would not necessarily have been interested in that question. There
are different arguments used by different government departments,
which is one of the difficulties.
Ms O'Grady: It is cheaper but,
frankly, without any international labour standards being respected,
which is disappointing.
Mr Page: It is cheaper and also
leads to the loss of jobs in Lancashire. That gives rise to costs
in terms of unemployment and social cohesion.
Q128 Judy Mallaber: How far is the
difficulty about public procurement and following the rules to
do with the fact that it is hard to have one overarching policy
if different government departments and also local government
want to do their own procurement to meet their budgets?
Ms O'Grady: What they can have
in common are certain principles. Frankly, the biggest problem
for businesses of all sizes is consistency between departments
and having to go through the same hoops again and again, even
though they have already provided information for one contract
that can be stored if there is proper coordination between and
within departments, and better trained procurement managers. Unfortunately,
some employer organisations will just describe it as red tape.
We share the concern about the need to simplify, but that can
be done without diluting standards. One can simplify and also
take into account some of the key issues, for example labour standards
that we have been discussing and vocational training and equality.
Q129 Judy Mallaber: What discussions
have you had with government ministers about how they can implement
the Warwick commitment to UK manufacturing when it comes to procurement?
Ms O'Grady: We have had lots of
Q130 Judy Mallaber: Has it resulted
in a change in the rules and how the structures determine the
giving of contracts?
Mr Page: One body through which
we are pursuing this is the Manufacturing Forum which has a whole
sub-group looking at procurement and how it can take forward some
of these issues in that forum. There was a line in the National
Policy Forum report, agreed at Warwick which said, "Labour
will be proactive to ensure manufacturing does not lose critical
mass and disappear." Given the current trend of manufacturing
jobs which has been steadily downwards and is likely to go below
three million for the first time next year, the question is: at
what stage will we lose critical mass? How do we protect the critical
mass? The TUC's suggestion as part of the solution is to focus
on the areas where we can have manufacturing strengths going forward.
That was the point I made earlier when I referred to aerospace,
defence, pharmaceuticals and green manufacturing. We will not
hold on to all of it but we can hold on to a lot of it if we focus
on our areas of strength. In a sense, that is one of the key lines
of Warwick. We probably ought to be talking more about ensuring
that we protect our critical mass in manufacturing. We would be
very interested to pursue that with you and every other forum
through which we can possibly raise these issues.
Q131 Mrs Curtis-Thomas: I do not
think that there is a shortage of opportunity for the government
to enforce contracts. There is no legal restriction placed on
it. We have two specific problems. One is that we do not write
into heads of contract major requirements with respect to the
employment of people in a particular area, although we have the
right to do so. The other is that when we do that we do not enforce
the contract and we do not work with employers who want to help
us enforce that contract. Is that your experience?
Mr Page: There is nothing that
you have said with which I would disagree.
Mrs Curtis-Thomas: I make that point
because there is nothing in the UK to preclude us copying what
happens on the continent except our willingness to enforce that
requirement and negotiate it with the company.
Judy Mallaber: The reason I asked about
the government structure is that there are different issues of
budgetary constraints in different departments, local authorities
and so on where they want to maintain the ability to sort out
their own procurement.
Q132 Chairman: You made one practical
point which we also heard from industry as well. You believe that
the quality of some of those doing the procurement in different
parts of the government needs to be addressed?
Ms O'Grady: I do. In particular
because in many cases we have longer contracts there is a real
opportunity to develop a relationship for improvement over the
medium term. I think that we are missing that one.
Chairman: That is very useful. We are
beginning to have a rather interesting conversation, but perhaps
we ought to call a halt now. We are grateful to you for your evidence
which in many respects has been illuminating and really useful.
Thank you very much indeed.