Time to stand up for our national interest, and not be a slave to EU procurement nonsense

Britain shouldn't be hamstrung by rules from Brussels which make no sense, writes Michael Dugher.

The Government recently confirmed that the German conglomerate, Siemens, has won the £1.6bn contract to build rolling stock for the Thameslink line.  This decision is a huge blow to Bombardier, the Derby-based train manufacturer, and a stark example of the Government’s approach to British industry.  Ministers have defended the appalling decision by citing EU procurement rules, but it is inconceivable that any other EU country, bound by the same rules, would have made the same decision 

This month also saw the first meeting of Labour’s new cross-departmental procurement group, made up of a frontbench shadow minister from every shadow team.  The quality of procurement practise across the public sector varies markedly and part of the problem is that there is still a fragmented approach with Whitehall operating in silos.   The aim of the new group is to address this, as well as to develop new thinking to feed into our ongoing policy reviews.  One of the major issues we will be looking at is the need for more flexibility in relation to EU procurement rules. 

The problems around EU procurement are complex and far from new.  Initially, EU Directives were designed to ensure transparency and non-discrimination, leading to outcomes which represent good value for money.  But there has been a growing sense amongst British businesses that when it comes to EU procurement rules, the current system simply doesn’t function fairly and that our continental neighbours (and competitors) manage to support their domestic industry in a way that simply doesn’t happen enough in the UK.  This has got to be bad for the British economy.    

In 2004, Gordon Brown commissioned Alan Wood to look into this area and he produced a report which showed just how one-sided the procurement rules have been operated.  Many British business leaders quoted in the report spoke of an uneven playing field and how other European countries were able to fit the specifications of a contract to give a good chance to domestic suppliers.  This explains, for example, why all trains in Germany are built by Siemens.

In countries like Germany and (above all) France, contracts are often sliced up into parts so that each slice falls below the minimum required for compulsory international tendering.   There is also often an important specification that states that as well as considering price, the final choice has to represent “best value”, a concept which forces Ministers to take into consideration wider economic, environmental and strategic industrial factors. 

The result is that the single market in procurement is often a bit of a chimera, with countries tending to support home industries and domestic taxpayers as much as they can.

The obvious question then is this: why have we not been acting in the same way in the UK?  In Britain, it seems, many of the problems have stemmed from what might be described as Whitehall's rather ambivalent attitude towards British industry.  For years, civil servants in Whitehall have too often used EU procurement rules as a basis - an excuse even - to make recommendations to Ministers that simply do not do the right thing by the UK.

As the procurement expert Professor Dermot Cahill said when giving evidence to the new shadow procurement group this month, purchasers often hide behind EU law as “the problem”.  He added that to start with only 20 per cent of public procurement tenders are large enough to fall under the EU rule requirements, and that even large contracts are more flexible than they are sometimes made out to be.   

Unfortunately, Ministers in this Government appear either to share the indifference to British industry or are simply content to sign off advice without properly challenging their officials.  The Government’s handling of the Thameslink contract is an example of this attitude.  And another scandalous recent example was with the London Olympics – where out of the 2,717 cars procured to drive officials and athletes around during the event, only a 360 were manufactured in the UK.

So a complete shift in mind-set is needed in Whitehall.  Public procurement is an important driver for economic growth and employment and its creative use can help maximise the impact of public spending.  As Ed Balls has said recently, Labour could be set to inherit a very difficult financial situation in 2015, which will require us to govern in a different way with much less money around.  So how we use procurement to best effect and best value will become increasingly important.   

Ed Miliband and Chuka Umunna have both already spoken about using the power of procurement to support British innovation and jobs, calling for large suppliers to offer apprenticeship opportunities on public contracts as a way of sharing the proceeds of growth.  And over the last few years, the Labour Government in Wales has been successfully moving towards this wider approach.  For example, Dermot Cahill said that the introduction of “community benefit” criteria in Wales has meant that there is public value left behind when procurement contracts finish.     

This approach is certainly not about being anti-open competition.  It is about being smarter.  It is about considering what is best for the UK, in a wider economic context, when deciding the criteria for major public procurement contracts and when spending British tax-payers money. 

And despite perceived wisdom, none of this is incompatible with EU law.  Of course, there are technical revisions to EU procurement rules that will help remove barriers for British businesses trying to access the European market - and this will be part of Labour’s determination to drive reform in the EU so it once again works in our national interest.  But crucially, we need to look at why we are not showing the same ingenuity and flexibility that other EU states currently do.

The irony is that by standing up more for our national interest, and refusing to be a slave to EU procurement nonsense, our approach might actually make us more European in that we would be acting in a way that is more like our European counterparts.  The consequence of this would be Britain left better off.        

Michael Dugher MP is Shadow Minister without Portfolio and Vice-Chair of the Labour party. He jointly chairs, together with Chuka Umunna, Labour's frontbench procurement group

Photograph: Getty Images

Michael Dugher is Labour MP for Barnsley East and the former Shadow Secretary of State for Culture, Media and Sport.

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Why the Liberal Democrats by-election surge is not all it seems

The Lib Dems chalked up impressive results in Stoke and Copeland. But just how much of a fight back is it?

By the now conventional post-Brexit logic, Stoke and Copeland ought to have been uniquely inhospitable for the Lib Dems. 

The party lost its deposit in both seats in 2015, and has no representation on either council. So too were the referendum odds stacked against it: in Stoke, the so-called Brexit capital of Britain, 70 per cent of voters backed Leave last June, as did 62 per cent in Copeland. And, as Stephen has written before, the Lib Dems’ mini-revival has so far been most pronounced in affluent, Conservative-leaning areas which swung for remain. 

So what explains the modest – but impressive – surges in their vote share in yesterday’s contests? In Stoke, where they finished fifth in 2015, the party won 9.8 per cent of the vote, up 5.7 percentage points. They also more than doubled their vote share in Copeland, where they beat Ukip for third with 7.3 per cent share of the vote.

The Brexit explanation is a tempting and not entirely invalid one. Each seat’s not insignificant pro-EU minority was more or less ignored by most of the national media, for whom the existence of remainers in what we’re now obliged to call “left-behind Britain” is often a nuance too far. With the Prime Minister Theresa May pushing for a hard Brexit and Labour leader Jeremy Corbyn waving it through, Lib Dem leader Tim Farron has made the pro-EU narrative his own. As was the case for Charles Kennedy in the Iraq War years, this confers upon the Lib Dems a status and platform they were denied as the junior partners in coalition. 

While their stance on Europe is slowly but surely helping the Lib Dems rebuild their pre-2015 demographic core - students, graduates and middle-class professionals employed in the public sector – last night’s results, particularly in Stoke, also give them reason for mild disappointment. 

In Stoke, campaign staffers privately predicted they might manage to beat Ukip for second or third place. The party ran a full campaign for the first time in several years, and canvassing returns suggested significant numbers of Labour voters, mainly public sector workers disenchanted with Corbyn’s stance on Europe, were set to vote Lib Dem. Nor were they intimidated by the Brexit factor: recent council by-elections in Sunderland and Rotheram, which both voted decisively to leave, saw the Lib Dems win seats for the first time on massive swings. 

So it could well be argued that their candidate, local cardiologist Zulfiqar Ali, ought to have done better. Staffordshire University’s campus, which Tim Farron visited as part of a voter registration drive, falls within the seat’s boundaries. Ali, unlike his Labour competitor Gareth Snell and Ukip leader Paul Nuttall, didn’t have his campaign derailed or disrupted by negative media attention. Unlike the Tory candidate Jack Brereton, he had the benefit of being older than 25. And, like 15 per cent of the electorate, he is of Kashmiri origin.  

In public and in private, Lib Dems say the fact that Stoke was a two-horse race between Labour and Ukip ultimately worked to their disadvantage. The prospect of Nuttall as their MP may well have been enough to convince a good number of the Labour waverers mentioned earlier to back Snell. 

With his party hovering at around 10 per cent in national polls, last night’s results give Farron cause for optimism – especially after their near-wipeout in 2015. But it’s easy to forget the bigger picture in all of this. The party have chalked up a string of impressive parliamentary by-election results – second in Witney, a spectacular win in Richmond Park, third in Sleaford and Copeland, and a strong fourth in Stoke. 

However, most of these results represent a reversion to, or indeed an underperformance compared to, the party’s pre-2015 norm. With the notable exception of Richmond’s Sarah Olney, who only joined the Lib Dems after the last general election, these candidates haven’t - or the Lib Dem vote - come from nowhere. Zulfiqar Ali previously sat on the council in Stoke and had fought the seat before, and Witney’s Liz Leffman and Sleaford’s Ross Pepper are both popular local councillors. And for all the excited commentary about Richmond, it was, of course, held by the Lib Dems for 13 years before Zac Goldsmith won it for the Tories in 2010. 

The EU referendum may have given the Lib Dems a new lease of life, but, as their #LibDemFightback trope suggests, they’re best understood as a revanchist, and not insurgent, force. Much has been said about Brexit realigning our politics, but, for now at least, the party’s new normal is looking quite a lot like the old one.