Public Procurement

HC Deb 04 May 1989 vol 152 cc416-38

7.1 pm

The Paymaster General (Mr. Peter Brooke)

I beg to move, That this House takes note of European community Documents Nos. 7496/88 and the Supplementary Explanatory Memorandum submitted by the Treasury on 24th October 1988 and 5909/89 relating to public works contracts and 10497/88 and the Supplementary Explanatory Memorandum submitted by the Treasury on 2nd May 1989 relating to compliance with Community rules on procedures for the award of public supply and public works contracts; endorses the view that revisions to Directive 71/305/EEC are necessary to improve public purchasing throughout the Community; welcomes the Government's endeavour to secure a statisfactory outcome in discussions on the proposal on public works contracts in the Council of Ministers; and supports the Government's intention to press for a means of improving compliance with Community rules on procedures for the award of public supply and public works contracts which places appropriate responsibility on Member States.

Madam Deputy Speaker (Miss Betty Boothroyd)

I have to announce that Mr. Speaker has selected the amendment standing in the name of the hon. Member for Thanet, South (Mr. Aitken) and other hon. Members.

Mr. Brooke

The debate is about two of the proposals that the Commission has made with the purpose of opening up public procurement.

We debated the first of the Commission's proposals, which was intended to improve the supplies directives, in Standing Committee in December 1986. Later that month the Commission submitted the first version of its proposal to amend the works directive; a year later, it submitted a measure intended to secure compliance with that directive and with the supplies directives; and it introduced proposals to cover the so-called excluded sectors last autumn. We shall be debating the proposals on the excluded sectors on another occasion, but it has been agreed that it is appropriate to deal today with both the proposal to amend the works directive and that to improve compliance.

Although the proposal on works was submitted in December 1986, the Commission made significant changes to it about a year ago. The Select Committee on European Legislation considered that the amended proposal raised issues of legal and political importance and recommended it for debate. Unfortunately it was not possible to arrange a debate before the Council of Ministers adopted a common position. However, I did try to keep the Chairman of the Committee informed of developments in Brussels, and I am glad now to have the benefit of the views of the House before the directive comes to the Council for adoption on the basis of the re-examined proposals that the Commission has now submitted.

In the case of compliance, there have so far been only initial discussions in Brussels. It has already become clear, however, that the Council is likely to reach a common position that differs in a number of important ways from the Commission's proposals. I believe that what is emerging may prove more acceptable to the House than the Commission's proposal, but I have to say that the new texts will require very careful examination.

Before going further, I should like to say a word about the procurement directives generally. They were originally adopted long before the present programme to complete the single market. The works directive was adopted before we joined the Community. The existing directives were put in place because the Community wanted to provide a framework that helped ensure that the obligation under the treaty not to discriminate on grounds of nationality was fulfilled. The same purpose was behind the Commission's inclusion of public procurement in its White Paper on the internal market in 1985, and Heads of Government have since given support to the objective of opening up public procurement more fully.

Changes to the supplies directives have been in force since last January. Changes to the works directive are clearly in prospect—and we can expect measures to be adopted which will make it easier to enforce compliance. The Government have welcomed those initiatives because we believe that the administrative burdens that the directives may impose are outweighed by the contribution they can make to the achievement of a single market.

I accept that others may hold different views on the balance of advantage. A large number of people have helped us by commenting on the proposals and many have disagreed with parts of them. I greatly value the willing co-operation and assistance that they have given. I suggest to them that they changes that we are discussing to the works directive improve the chances of contractors in this country winning business in other member states of the Community and that it is to our advantage to ensure that adequate procedures are available to make sure that the rules are obeyed throughout the Community.

Mr. Teddy Taylor (Southend, East)

What procedures?

Mr. Brooke

I repeat—to ensure that adequate procedures are available to make sure that the rules are obeyed throughout the Community. I appreciate that my hon. Friend the Member for Southend, East (Mr. Taylor) has put his name to the amendment and I am sure that he will speak to it in due course. I promise that I will respond to him at that stage.

I propose to highlight the main changes that it is proposed should be made to the works directive to make it more effective, and to draw attention to one or two points that we think will cause difficulty. I will then comment on the changes to the Commission's proposal to improve compliance that are now being discussed in Brussels.

The proposal to amend the works directive includes a number of changes which are similar to those adopted last year in relation to the supplies directive and which we were able to support. More time is to be allowed for contractors to respond to advertisements and to invitations to tender. Contracting authorities are required to publish notices of contracts they have awarded and to give explanations to eliminate candidates or tenderers on request. They are also required to publish the essential characteristics of works contracts above the threshold as soon as decisions on planning are taken. Other measures to improve transparency and to assist the monitoring of compliance include the retention of records and the provision of statistics.

Contrary to some suggestions, the proposal does not limit the use of the so-called restricted procedure. That is the procedure used by most of our contracting authorities and involves the selection of tenderers from those firms that express an interest. This reduces the burden on contracting authorities and also on contractors, since the cost of submitting tenders can be very high. Contracting authorities will need, of course, to be able to show that they make their selection of tenderers without discriminating against candidates from other member states.

There are exclusions for works declared secret, those that are subject to national security considerations and those that need to be procured under other international rules. The proposal replaces the previous limited exemptions from the open and restricted procedures by negotiated procedures involving one or more contractors, with a call for competition in some cases. This should reduce the incidence of single tendering and provide greater opportunities for contractors without imposing undue burdens on contracting authorities. Similarly, new provisions on the use of standards will increase the ability of contractors to compete throughout the Community while taking in from the supplies directive derogations that were negotiated there to protect value for money.

The directive is also amended to catch any form of contract for civil engineering or building works let by, to begin with, Government Departments and local authorities, but it is not intended to apply to contracts to be let by management contractors. The field of application is extended to encompass bodies which meet criteria for defining "bodies governed by public law" and to include rules on the award of concession contracts and the award of works contracts to third parties by concessionaires. In addition, authorities covered by the directive that fund more than 50 per cent. of the cost of a contract for civil engineering works or certain building works must make compliance with the directive a condition of the funding. The threshold, however, is to be raised to 5 million ecu—about £3.3 million at today's rates. The fivefold increase means a considerable lightening of administrative burdens on contracting authorities.

There are a number of improvements intended to benefit small firms. For example, the publication of contract award notices should help them to target main contractors. There is a separate provision allowing contracting authorities to ask tenderers to indicate any share of the contract that they intend to sub-contract to third parties. To make it clear that contractual freedom is not affected, the Council agreed to say in its common position that information given to the contracting authority is without prejudice to the question of where responsibility lies for the contract. The Commission, accepting a suggested amendment from the European Parliament, now wishes the provision to say: Without prejudice to the question of final responsibility. This may be acceptable although we would prefer to see an explicit reference to contractual responsibility.

An area where the existing directive and the proposal were unclear was whether contracting authorities could require tenderers to be quality assured. It is important that they should be able to require that, since the Government mean to increase the use they make of quality assurance. The Council agreed that technical specifications should be defined in the directive to include requirements for quality assurance. It helped to be able to say that a standard on quality assurance had been adopted at European level that national standards bodies would be required to implement. It was a British standard, BS5750, that was adopted, and I pay tribute to those responsible for its development and for its acceptance internationally.

The Council also agreed to amend the provision in the Commission's proposal relating to abnormally low tenders. That required contracting authorities to ask for written explanations in such cases, but it was putting an unnecessary burden on contracting authorities in cases where they were prepared to accept the offer. The changes now made will limit the obligation to ask for explanations, and take them into account, to cases where the contracting authorities consider rejecting such an offer.

Another area in which improvements have been made is the acceptance of variants. The proposal now says simply that where the criterion for the award of the contract is that of the most economically advantageous tender, contracting authorities may take account of variants that meet their minimum specifications, which they must state in the contract documents together with any specific requirements for their presentation. A proposal to limit the rejection of variants now says only that rejection is not allowed on the sole ground that a variant has been drawn up by reference to European standards, or the like, instead of those to which the contracting authority had referred.

Two provisions that pose difficulties for us result from amendments that the European Parliament proposed to the common position and which the Commission has taken into its re-examined proposal. The first would allow contracting authorities to impose conditions for participation aimed at assisting the fight against long-term unemployment or for the employment of young people. But that could be only in the context of programmes agreed by the Commission.

The background is that last September, in deciding on a case brought before it by a court in the Netherlands, the European Court of Justice pronounced on the position under the existing directive. It found that the directive allowed member states to make their own rules on public procurement provided they were compatible with Community rules and that, subject to national rules, contracting authorities were free under the directive to impose conditions relating to the use of the long-term unemployed—provided there was not discrimination, direct or indirect, against firms from other member states. The nature of the condition would have to be mentioned in the tender notice published in the official journal.

What is now proposed would limit the freedom of member states to forbid conditions of the kind that it mentions. Conversely, the provision might prevent the use by contracting authorities of other conditions for participating in a contract procedure. The proposal also changes the balance of responsibilities by letting the Commission rather than national courts decide in the first instance whether a condition is discriminatory. Finally, the meaning of the expressions "operational programmes" and "competent authorities" is unclear. For these reasons, that provision is not one that we could support.

The second provision that causes us difficulty is a requirement on contracting authorities to state where information can be obtained on the employment conditions applicable where the work is to be carried out, and to require tenderers to state that those conditions have been taken into account in their offers. That provision involves just the kind of administrative burden we want to avoid. Clearly it is important that contractors should make their offers with the necessary knowledge of the environment in which they would be working. But that is best done by the firms themselves making inquiries or having inquiries made for them. Making it a requirement for contracting authorities to state the source or sources of the relevant information assumes knowledge that they may not have, particularly of works to be carried out elsewhere. If they make errors of omission, it could lead to confusion over liability. The solution that the Council found in its common position was to say that contracting authorities may indicate the sources of the relevant information. If the provision is mandatory, there may need to be safeguards for contracting authorities.

Mr. Teddy Taylor

Can my right hon. Friend say what will happen procedurally'? He says that the European Parliament proposed two changes to the common position that Britain does not like. What will happen next? Will there be a majority vote, or must there be unanimity? If there is not unanimity, will we have to scrap those proposals? My right hon. Friend is right in the thick of it, and it would help the House to understand those matters if he will explain what will happen to those two unacceptable amendments.

Mr. Brooke

I shall answer my hon. Friend's question, but I want to make absolutely certain that my reply is correct. I shall respond to his point later.

Before moving on from the works directive, it may be helpful to refer to the position on negotiations with those who submit tenders. The Council agreed with the Commission to publish a statement on the extent to which negotiations can take place where there is competition based on open or restricted procedures. Negotiations will be ruled out where they are likely to distort competition, but it will be recognised that discussions can properly take place for the purpose of clarifying or supplementing the contents of tenders or the requirements of contracting authorities. We regard it as important to ensure that contracting authorities can hold such discussions in their pursuit of value for money.

The proposal for the directive to improve compliance does not relate only to the works directive, but applies to the supplies directives as well. Getting better compliance has long been the Commission's objective, and member states have shared it. Most, of course, are fairly certain that there are not undue problems in their own countries. They say that what they need is to be sure that others are following the rules. The United Kingdom can justifiably claim that it has a good record in observing the rules. That is not the point. For suppliers and contractors to have the necessary confidence to go out and get the business, they need to be satisfied that their bids will be properly and fairly considered.

That is what the proposal on compliance is intended to ensure. At its heart is a set of requirements that member states must ensure are fulfilled in each country. They come down to saying that procedures shall exist to enable firms who may feel aggrieved to obtain reviews through judicial or other procedures. Putting it that way enables the Commission to cope with different practices in the various member states. But it is worth pointing out that the Commission is showing itself insistent on ensuring that, whatever the system, there is a completely independent element within it.

The Treasury describe in the latest supplementary explanatory memorandum how discussions in the Council machinery are pointing towards significant changes in the proposal. I regret that it was not possible to provide the memorandum until a day or so ago. However, it shows the very latest position in the Council, and I shall say more in a moment about how we see the position on one or two points.

Rather than take up time by examining the way that the proposal developed at every stage, let me describe some key points in the version now being discussed. The latest form of the proposal still provides for damages to be available to persons harmed by an infringement, but leaves the decision on how damages are to be calculated in the hands of member states. We believe that that is right. We do not believe that, as the Commission originally proposed, it should be possible to claim compensation in respect of forgone profits or lost opportunities.

The proposal in the form that the Council is now discussing no longer gives the Commission a power to intervene as of right in court proceedings, as the Commission originally intended. Instead it provides that member states may require that the leave of the court is obtained before the Commission presents its observations. Courts in the United Kingdom can, if they wish, already invite the Commission to do that. Normally, however, they would expect to refer a question of European law to the European Court of Justice. We need to consider whether a provision pointing them in another direction is justified.

The proposal in its latest form does not give the Commission the power to suspend award procedures. Instead it includes a procedure whereby the Commission may notify a member state if it considers there is to be a clear and manifest infringement. It is recognised that the member state, in replying, may refer to the fact that review proceedings are under way. I know that some interests—such as the Confederation of British Industry—would prefer the main feature of the enforcement mechanism to be a system of audit. That idea is attractive, and I believe that it may have an important place in securing more open procurement in the excluded sectors, where directives on procurement have still to be adopted. However, I do not believe that we can hope to convince the Commission or other member states that audit can take the place of the kind of rules that we are now discussing in relation to Government Departments and local authorities. For one thing, we cannot, at least at this stage, expect to obtain the more flexible régime for the award of contracts that we hope to get for the excluded sectors, and which provides the main rationale for adopting the audit approach.

The CBI itself wants to establish what it calls a central complaints procedure that may include more than letting firms seek notification by the Commission in the way I have described. I shall be interested in how the CBI develops its thinking, but I note the difficulties that may arise in preserving the proper bounds of responsibility of the Commission and of member states. The CBI says that actions in the courts should always take place after contracts are awarded. I ought to point out that the courts in this country can already step in before that point.

I know that hon. Members may have a number of other concerns with both the compliance proposal and that on works. I should like to say a word or two more about the Government's view. The Government share to the full the wish to avoid unnecessary bureaucracy. I believe that the changes made to the Commission's original proposal to amend the directive on works go a long way towards getting rid of the rigidity that makes life difficult for purchasers. Many of the points that are raised apply, in fact, more to supplies than to works. Then there are those who would prefer the directive to impose obligations of a social kind on contracting authorities. The Government believe that it is not appropriate for a procurement directive to do this, and that view is shared by a number of other members states.

Hon. Members may ask whether the works directive, even when it is amended, is likely in practice to increase competition. So far, the number of contracts awarded to non-national firms has been small. The number will grow, but we should not expect figures like this to tell the whole story. Increasingly, contractors are looking at other ways of breaking into new markets, such as joint ventures and the acquisition of existing businesses. Such moves will be made easier by the provisions in the new directive that are designed to give greater openness to the process of awarding contracts.

Some of those who have commented to us on the Commission's proposal on compliance have been concerned about the risk of expensive litigation. The point is a fair one, though, of course, it arises because of the wish, which we share, to give suppliers an opportunity to take up complaints. The courts will be able, within the terms of the Commission's proposals, to deal with frivolous actions. There may be a case for making this explicit, while avoiding unnecessary harmonisation of national provisions. In relation to the excluded sectors, the Commission has itself made it clear that it recognises the extent to which commercial enterprises may be vulnerable to litigation, and will take that into acount in making its separate proposals on the enforcement of any rules on procurement that may be adopted for those sectors.

As for the present proposals on compliance and works, the Government believe that they include features that it is practicable to include in new directives soon and that it is worthwhile to try to do so. Subject to seeking the changes I have mentioned in the proposal for works, the Government propose to join other member states in agreeing to adopt the directive. As for compliance, we believe that there are important benefits to be obtained, and we therefore propose to work with the Commission and other member states to produce a system that puts responsibility on member states, where it belongs.

7.23 pm

Mr. Teddy Taylor (Southend, East)

I beg to move, as an amendment to the motion, at the end to add: 'and would welcome the provision of a speedy and effective system of arbitration in cases where contractors consider that they are not being afforded fair and equal rights to tender and to secure public purchasing contracts.'. I am afraid that my hon. Friend the Member for Thanet, South (Mr. Aitken), who is one of the most conscientious Members of the House, was expecting the motion to be debated later in the evening. I am therefore moving the amendment on his behalf. I apologise for the fact that my hon. Friend is not here, but I remind the House that he is one of the most conscientious Members in his attendance at Euro-debates.

I hope that the Government will accept this brief and non-controversial amendment. We are all of the view—whether one is critical or uncritical of the EEC—that anything that can bring about free trade in Europe should be supported 100 per cent. If the 1992 programme will achieve that aim, we shall all be very happy, particularly if it does not bring protectionism with it.

What worries me, my hon. Friend the Member for Thanet, South and others, is that there have been many assurances of this nature in the past. However, for all kinds of reasons—certainly not through the Government's fault —nothing has happened. Hon. Members will recall that after the Prime Minister returned from Europe she told us that she had received a firm assurance that the EEC would impose spending controls. Unfortunately, they did not work because the Commission was still able to use crazy accountancy devices. The Court of Auditors report which has just been published shows that, while budget expenditure was expected to increase by 3 per cent., it actually increased by 25 per cent. We expected good things to happen. Sadly, they did not happen—not because of the Government but because we did not check everything out.

We have also encountered problems with 1992 itself. The insurance industry, in which I am involved, expected exciting things to happen in connection with free trade, but sadly the directive illustrates that free competition will be very limited. We have received assurances in the past about fraud. I know that the Minister is taking a personal interest in the activities of the Mafia. He will have read the recent statement by the leader of the magistrates in Sicily that he fears that the directive might lead to an extension of the nasty activities of the Mafia. The Mafia used to be in charge of crime, prostitution and the drugs industry in Sicily, but we understand that it is now engaging in other activities because money from the common agricultural policy is much easier to come by. Whether or not that is true, fraud is a problem.

We are worried that all these excellent measures will add to the costs of contracting authorities, councils and public bodies. They will have to provide a great deal of information and go through all kinds of procedures which may not work. That is IA by it would help enormously if the Government felt able to provide an easy arbitration procedure. If a British contractor felt that he was being discriminated against unreasonably, or that he was being treated shamefully by a public authority, he would then be able to do something about it.

The Minister probably knows about the example that I intend to mention. If he does not, he should speak to his right hon. and learned Friend the Foreign Secretary or to the Secretary of State for Transport. Southend wanted to be able to fly a plane to Ostend and then to run a bus from Ostend to Frankfurt. We were told that we could do so; European Community legislation on the subject was clear; we could go ahead right away. The Minister knows what, sadly, happened. We had to appeal to the Foreign Secretary who went to see Mr. Genscher, the Foreign Affairs Minister in Germany. They talked about it, but nothing happened. Then the Foreign Secretary approached the splendid Minister of State at the Foreign Office. She tried terribly hard. She took infraction proceedings—which I do not understand, but other hon. Members will. Unfortunately, nothing happened.

With some of my friends on Southend council I then flew to Bonn. There, together with the splendid British ambassador, we went to see someone who, we were told, was the head of the German transport department. We had a frosty meeting with him. We found that he was not the head of the department; he said that he was in charge of the Berlin airlift. When I told him that the Berlin airlift ended over 30 years ago he told me that there were residual problems.

The point is that, although the law was clear, we battled on for four years and got nowhere. After the four years were up and when it seemed that something was going to be done, we found, sadly, that the poor firm had gone bust.

I know that the Minister is battling hard for Britain, as he always does. He is fighting for jobs and for the good of Britain in the Community. However, it will not help Britain if lots of extra bureaucratic controls are imposed. Something must be done about it.

I am worried about the proposal that all these matters should be referred to the Commission. The Minister must be aware of what happens when matters are referred to the Commission. There are all kinds of discussions, meetings and procedures. If my right hon. Friend is in any doubt about that, he should talk to the boss of Amstrad, Mr. Alan Sugar. He will tell my right hon. Friend what he thinks about the Commission.

All we want is easy access to easy arbitration. We do not need a great court system, but we should have a small number of highly qualified arbiters. They should not have the right to change a contract, as that is extremely difficult, but they should have the right to impose penalties and perhaps to award compensation. It is crucial that there should be an easy method of access to prevent organisations such as the German Lander, which have behaved rather strangely in the past, and to stop some of the sillier local authorities—perhaps some of the British local authorities—from showing discrimination where there should be freedom. Therefore, I hope that the Minister will appreciate that the amendment does not bind the Government in any way. 1t does not tell them to stand on their head and to throw out the regulations.

We all agree that free trade and the extension of freedom to purchase would be good, but there is not much point in putting extra burdens on industry unless we discover that the system works. Therefore, I hope that the Minister will accept the amendment and start a new process of good will and co-operation in the House of Commons so that we can all fight together for British industry and British jobs.

7.30 pm

Mr. Stuart Holland (Vauxhall)

I begin by saying that the Opposition welcome the amendment and we hope that the Government will accept it.

Mr. Quentin Davies (Stamford and Spalding)

The hon. Member for Vauxhall (Mr. Holland) uses the first person plural to describe the Labour party. Will he tell us why only one Labour Member is present for a debate on a very important issue?

Madam Deputy Speaker

Order. That is not relevant. As this is a timed debate, we should make some progress.

Mr. Holland

I am sorry that the hon. Member for Stamford and Spalding (Mr. Davies) cannot count. Two Labour Members are present on a day when the Conservative ranks appear rather thin, and we do not have to stretch our imagination to discover why.

The amendment welcomes the provision of a speedy and effective system of arbitration when contractors consider that they are not being afforded fair and equal rights. I should have thought that the Government would accept the amendment. Who could be against speedy and effective systems—the Government have told us that they do not favour bureaucracy—and who could be against fair and equal rights? The amendment is limited in that it is not highly specific in the manner in which the hon. Member for Southend, East (Mr. Taylor) demanded that legislation concerning the Community should be. We shall not push the matter to a vote, but we certainly support the amendment and we urge the Government to accept it.

We are very glad to know, or to see in the press, that the House may soon adopt new methods for Community legislation. It would have been interesting had the Minister been able to refer to the reports in the press and to give us some indication of the way in which such legislation will be considered. Perhaps he will do that when he replies to the debate. If it is the case that the House will receive earlier information on proposals to the Council of Ministers, it will be possible, through discussion and debate, as is classic in the House, to influence the legislation through amendments. Instead of getting legislation which is already six months out of date, the House might have the chance to consider it in advance.

Yet again, we are having a short debate on the legislation, although its provisions are wide-ranging. There are half a dozen articles and various sub-clauses covering more than two and a half pages of text, and that is on tendering alone. They do not concern the other provisions which have been proposed by amendments in the European Parliament and which have aroused considerable concern elsewhere.

The proposals include the issue of abnormally low tenders and how to cope with them, and the advertising thresholds for small and medium-sized firms. They seek to address the abuse of a dominant position in the internal market in tendering by big business. Classically, larger firms can put in lower prices on a contract and squeeze out small and medium-sized firms. The raising of the threshold, which we regard as perfectly reasonable, will make it possible for small and medium-sized firms to get contracts without the bureaucracy which would otherwise be involved in awarding those contracts. That provision also applies to the information on sub-contracts, and we welcome it. In other words, it should be open to small and medium-size firms in practice to bid for sub-contracts on large projects.

However, we are disappointed by the Government's response to some of the proposals by the European Parliament about special provisions on long-term unemployment and the employment of young people. It also is striking that the Minister did not refer to special provisions for contracts in assisted regions of the Community. It is perfectly clear why the Government are opposed to that. They say that they are concerned about changing the balance of priorities in the Community towards the Commission.

In an intervention, the hon. Member for Southend, East asked the Minister about the implications for the Single European Act, for majority voting and for article 100A. The Minister said that he was not prepared to reply to that, but an answer is necessary and it has to be yes or no. Either it is consistent with the Single European Act or it is not.

The Government are causing difficulties, or claim difficulties in other respects, when the contractors must reveal sources of relevant information when the contracts are submittee. Why do the Government have such difficulty with contracts which are designed to reduce long-term unemployment or to assist employment for young people? The Minister's speech, and certain background information contains arguments claiming that the Commission has not published the costs which various procedures would entail.

Perhaps the Paymaster General can answer the following question: what cost implications of awarding such contracts on a regional basis have the Government estimated? What is the cost to the Community of awarding contracts to local firms in a region of high unemployment, whether that is an inner-city area, an industrial region in decline? What costs are involved in doing that? In many cases the costs may be marginal in direct terms, but in indirect and social terms they can contribute to the regeneration of inner-city areas or industrial regions in decline, or stem the further decline of such regions. They can also bring hope through work and training, especially to the young who otherwise increasingly are persuaded that they have no hope of training or of getting a job.

We find it deplorable that the Government cannot support those objectives. Also, the Paymaster General's statement to the House about business and competition were, frankly, amazing. When he talked about competition, I thought that we would get at least a line or two of rhetoric about the thrusting entrepreneurs of the Government's mythology. Not at all. According to the notes I took at the time, the Minister said that there will be an increase in joint ventures and the acquisition of existing business. Is that what the Government have in mind as a result of that provision?

If it is, it means an increase of concentration and centralisation in the construction industry in the Community as a whole. Without provision for giving exceptional treatment to contracts either in the assisted regions or on social grounds, that is precisely the consequence of the measures before us. It has been seen in the past in other industries. In the United Kingdom there has been concentration in the construction industry. It is especially easy for big firms to achieve, as it is characteristic of the construction industry that firms themselves do not own all the equipment they use, but hire it on a sub-contract basis. It will, therefore, be open to the bigger firms in construction to bid for the bigger projects throughout the Community in a manner that will not be possible for small and medium firms whose own construction activities are in particular localities—whether southern Italy, Catalonia, Liverpool, the north-east, or Scotland.

The consequence of the provision is related to a philosophy of 1992 and the internal market that comes across clearly from what the Minister said—that the Government support the market dimension of the proposal, but not the social and regional dimensions although they are crucial to offset the concentration of the construction business into fewer hands in the Community. In that sense, the Government show themselves, regrettably, more concerned for the private interest than the public interest, more concerned for profit than for people and more concerned for big business than small business.

This approach is typical of the Government's general approach in the Community towards the 1992 proposals. The provisions should include the amendments concerning derogation for contracts in regions of high unemployment. They should be supported rather than opposed. Also, in practice, there is a strong case for such public contracts to ensure that equal opportunities are respected by the contracting firm, and that the firms awarded the contract should expect to have regard to the environment and sound environmental practices.

We have heard a great deal from the Government about the environment. Why did the Minister say nothing about that? Many of the schemes on which bids will be made in the Community will have environmental consequences and many of them will be major infrastructural schemes. Where is the provision to ensure that there is concern for protection of the environment in those schemes? Where is there any concern to ensure that contractors on a project such as the Channel tunnel, who may disturb the environment in either an urban or rural area for several years, will have any obligation to those living adjacent to the project whose lives may be disturbed? In those respects, the Government speak with one voice at an environmental conference in London and with another voice when there is a low attendance at a debate in this Chamber on Community legislation.

There is a consistent trend behind the Government's approach. It is consistent with the interview given a few days ago to Le Monde by the Chancellor of the Exchequer who, after all, has responsibility for this legislation, as is made explicit in the background memorandum. The interview concerned the 1992 proposals and the proposals for economic and monetary union in the Community. The Chancellor said that the Government supported the internal market proposals, but rejected the view of the Prime Minister of France that an internal market without a social dimension would he simply a jungle, or a house open to the winds. The Government will increasingly have to address the issues of the social dimension, whether they like it or not. There will be an increasing expectation that they should be concerned with areas of high unemployment, with the social implications of legislation and with matters of the environment.

The issue was put well in an article in today's Financial Times by Joe Rogaly, who writes: The mistaken belief that Britain has undergone a true revolution … lies behind the Bruges view that European integration can be allowed to go far enough to meet the trading needs of the partners—but certainly never so far that what has been achieved in Britain since 1979 will be overturned by corporatists and social democrats ruling from Brussels after 1992. Like so many other difficult equations of the 1980s, this one is all solved with mirrors. The reality is that Britain has little option but to move, ratchet by ratchet, with the rest of the EC; the bombast, which is based upon a sense of continued ideological superiority, is entirely in the opposite direction. As can be seen in this legislation, in rejecting the social dimension and preferential programmes for the regions, the Government and the Prime Minister have shown that they are out of date, out of touch and out of line with the rest of the Community.

On a personal note, the Prime Minister said that she had not spent 10 years in Britain rolling back the frontiers of the welfare state to see them now roll forward in Europe. It may be known to the House that I shall be accepting a post in the Community and I shall be working there with others in Europe to help ensure that they do precisely that. The social, regional and industrial policies that Europe needs can be formulated and mobilised, and widely supported by other Governments in the Community.

7.47 pm

Mr. Hugh Dykes (Harrow, East)

The Opposition spokesman concluded his remarks on a rather interesting and dramatic note. It is interesting to reflect briefly that, only a few years ago, he was a strong anti-Marketeer.

Mr. Holland

Although it may be a footnote of history, 1 must point out that my first employment on leaving university was to be an economic adviser to the then Prime Minister, Harold Wilson, on European Community affairs. I advised him then that the Community was neither a sabre-toothed tiger about to shred the nation state nor a springboard for federalism. I not only advised him to apply to join, but assisted indirectly with some of the negotiations. It would have been better if we had had successful negotiations in the 1960s on better terms than it was later possible to achieve.

Mr. Dykes

That was a long response. Coming back to 1970 and afterwards, when we did broadcasts together in French, the hon. Member for Vauxhall (Mr. Holland) was not keen on Europe. It is interesting to see the change in the Labour party's attitude. I hope that that will not be mirrored in my own party in terms of adverse changes of attitude to the European Community. I am sure that it will not be. The Conservative party remains genuinely, fundamentally and profoundly a quintessentially European party. I welcome the conversion of the Labour party's official spokesman and Labour Members and their developing enthusiasm for Europe—even if it is for rather negative reasons. It is part of a general realisation that the Community is here to stay, is a good thing, that membership of it is an outstanding historic development and a good thing for this country—

Mr. Teddy Taylor

Rubbish.

Mr. Dykes

The country is settling down at long last to the facts and realities of Community membership, like other member states, and the country and its official representatives are gradually and with increasing self-confidence getting used to working with foreigners. They are realising—it is a monumental surprise to some —that, like us, foreigners are human beings with needs, hopes, aspirations, desires and requirements, and that they are people we can trust and on whom we can rely in a developing Community.

Many people in the other member states will be saddened if they think that this country is at variance with their views or at odds with them on too many things. However, I believe that the press is exaggerating on that and that that will not happen because even in a House of Commons so overloaded with work and too much legislation, common sense will break through. However, it would be a pity if that manifested itself in a number of limited areas because the other member states welcome the intellectual and practical contributions that this country can make. One always gets that impression when visiting them and talking to their people.

Several agreeable things are happening right now about these directives. I pay a sincere tribute to the way in which my right hon. Friend the Paymaster General has handled them. As the only member of the Select Committee on European Legislation present in the Chamber, I pay a particular tribute to my right hon. Friend for the way in which, in difficult circumstances and with a short timetable, he kept us informed of the changes at the last stages, including his rather dramatically written letter of 2 May, which was appreciated by members of the Select Committee.

Another agreeable manifestation is that this debate is taking place—good Lord, I don't believe it, no it can't be —at 7 o'clock in the evening. It would be nice if it could last for longer than an hour and a half when we are debating such a complex area.

Mr. Teddy Taylor

Hear, hear.

Mr. Dykes

I hear my hon. Friend the Member for Southend, East (Mr. Taylor) expressing his agreement on that. Whatever their original view about the Community, its membership, the history thereof and the future, more and more hon. Members want the House of Commons to get to grips with more effective scrutiny. Indeed, there has been press speculation about that.

I am a most enthusiastic European. I am the kind of sensible person who carries ecu travel cheques on the continent. Although they are accepted in only a limited number of outlets at the moment, the future is long term and we should wait to see what happens with those developments. European money would be practical for all member states in due course and that, too, is a long-term development.

I have always been strongly in favour of effective and profound scrutiny. It is not right for the press or hon. Members to be pessimistic about that and to say, "We are swamped and overwhelmed," or "We cannot handle it." With the mechanisms that we employ and augment from now on and depending on the recommendations of the Select Committee on Procedure on the ideas that are to be promoted soon, both through the usual channels and publicly by the Leader of the House—and perhaps by the Labour party and the other Opposition parties also—the House of Commons and the House of Lords, in so far as it is involved, can engage themselves properly, without great difficulty, in those aspects of scrutiny and do the job properly. That will not be done by whingeing and moaning about every single item that emanates from Brussels and saying, "Here is yet another manifestation of bureaucracy," because that is usually a totally inaccurate and emotional comment. Instead we should concentrate on the important things when we are dealing with the legislative instruments that come before us.

I hope that we can get the mechanism right and have it at the appropriate last stage, rather than considering these legislative instruments like the several stages of a Bill in our own domestic legislation and, therefore, dealing with them repetitively. We should go back to the great policy areas of the development of European policy and consider the European Council as the supreme policy body, and not regard its policies simply as issues for the Council of Ministers to vote on, either by majority of unanimity, depending on the Commission's suggestions.

Although the Paymaster General will say that this is not his province—I hope that he has the chance to pay some heed to this issue, although I appreciate that he is making notes on all sorts of complex points relating to the directives—I stress that, to do what I have suggested, we need our European Supply days. We need all-day debates. We should send more provisions into Committee, if they are minor. We need debates like this, in the afternoon or the early evening, not late at night. We need greater attendance at such debates and I hope that that will come in the future. We should not necessarily give these matters more severe treatment just because they come from Europe than we give our own secondary legislation. It is absurd to think of a deserted House dealing with domestic secondary legislation and saying "That does not matter —it is not important," because, of course, it is important. However, European matters are different and we are still getting used to the substance and the chemistry of them, which is always a complex task.

I would go into these documents in detail if there were more time. Again, it is a pity that an hour and a half is the maximum time for a debate on such complex areas. These provisions are an extremely good example of where the Community is getting it right and where the British Government and, I hope, the British Parliament, are getting it right in terms of our responses to these matters. I agree very much with what my right hon. Friend the Paymaster General said about the documents.

Despite being an enthusiastic European, I hesitate about some of the amendments proposed by the European Parliament. As we know, they are not enforceable by that institution; they are only suggestions which may or may not be incorporated. I am glad that there is now a forcible Commission approach to achieving a single market for public supply contracts, works contracts and equipment contracts. There will be many bumpy moments on that stony, rocky and difficult path. Incidentally, I hope that when my hon. Friend the Member for Southend, East, is rightly pleading for British companies to get contracts in Italy or Germany in the future, he will plead hard for a German or an Italian company to get a contract in Britain on the same basis—

Mr. Teddy Taylor

Or an American company.

Mr. Dykes

Yes, and others, wherever they may be, but we are thinking at the moment of the European Community and its component member states.

We need a completely fair-minded and balanced approach to these matters, and not double standards that depend on an emotional nationalism, which is the obvious temptation. I have noticed that some of my hon. Friends, who are gung-ho free-market people in terms of domestic policies, always become massively interventionist if their own constituencies are affected by free market manifestations or by the closing of a business. They then become superb interventionists of the most ferocious blood-tooth kind when defending—[Interruption.] I shall not allow my hon. Friend the Member for Southend, East to tempt me, because I would be getting out of order. If my hon. Friend will be patient, I shall come back to him on another occasion. Perhaps I shall even write to him, if that is not something that only Ministers can say. Perhaps Back-Bench Members can say, "I will write to my hon. Friend." That may be the proper way to do it, but I shall have a conversation about this with my hon. Friend in due course.

Sometimes unwittingly, but usually consciously and cynically, people can have double standards. If we are to accept an open market in public supply contracts, it must be genuinely open. It must be a market in which we accept the rough with the smooth and where foreign companies can come here without our being surprised and disconcerted by the efficiency of their approach. Perhaps in future, contracts will start to be expressed in ecu. Public authorities in different member states could ask for the contracts to be expressed in ecu. Gradually, if ecu prices are posted, both in the manufacturing and contracting sectors and in the retail sector, in hotels, restaurants and shops, perhaps we shall gradually see a development, at the margin, of that European currency, alongside the currencies of all the member states.

Turning to the documents, at long last the Community is on the march. This has been a complex area with immensely complicated legal implications to be worked out by lawyers in all the member states. I agree with the general approach taken by my right hon. Friend and the Government on this matter and that we should keep this issue unbureaucratic, open and flexible so that we can ensure that the provisions are based on genuine commercial criteria from the contracting parties and the sub-contractors.

Obviously, much complicated negotiating remains to be done by representatives of Her Majesty's Government on these matters, especially in respect of the second directive to which my right hon. Friend referred. I wish my right hon. Friend well on that. We are now seeing the growing maturity of the House of Commons, which at long last is beginning to understand that Jacques Delors was misquoted when he referred to his famous 80 per cent. If one re-reads his words, one will find that he said that only the Bundestag and the House of Commons were doing anything like a little bit, or perhaps a bit more than a little bit, of effective, but none the less inevitably circumscribed, scrutiny.

He also said that if the Parliaments of the other member states did not adopt similar mechanisms, the parliamentarians of those member states and the populations represented by them would wake up with a rude shock and a sense of surprise and deception later when they realised that more and more decisions were being made collectively on behalf of the member states by the Council of Ministers, voting increasingly on a majority. What a terrible and frightening thought is a majority voting system, which used to be called by the old-fashioned word "democracy". I do not see why that should not work just as well in Europe as it does on a national scale.

7.59 pm

Mr. James Wallace (Orkney and Shetland)

This is a joyous occasion not only because we are dealing with a European matter at a relatively appropriate time of the evening but also because, whilst there is not unanimity, there is a fair amount of common ground in the Chamber. I am surprised that I find myself in considerable agreement with what the hon. Gentleman the Member for Harrow, East (Mr. Dykes) said, since his European enthusiasm has been shared over many years by members of my party. He spoke about the parting comments of the Member for Vauxhall (Mr. Holland). He will go to his new employment with the best wishes of all hon. Members.

One of the most surprising aspects is that I found myself having much in common on a European matter with the hon. Gentleman the Member for Southend, East (Mr. Taylor). He said that, if the creation of a single market improves free trade, it is to be welcomed. We share that view. I also shared his anxiety that, if there are some concealed bumps in what is otherwise meant to be a level playing field, they, too, should be rooted out.

I recall raising in the House almost a year ago, in a debate on shipbuilding, a contract that a local authority in my own constituency was placing for the building of some ferries. It received a very attractive tender from a company in another Community country that was believed to have been subsidised many times over, to a far greater extent than any subsidy allowed to a British company tendering for the same contract. We look forward to companies of different countries being able to tender for public contracts on equal terms.

I also share the concern expressed by the hon. Member for Southend, East on the question of implementation of these proposals. The motion says that the Government intend that the principal responsibility for ensuring compliance will rest with the member states. In this country, we have a good record of complying with directives, although we might argue about their terms before they are ultimately passed. However, I suppose we are concerned about compliance with the directives by other member states. It is probably not profitable to point accusing fingers, but we must be confident that other member states will comply properly.

I realise that we have been presented in this debate with very technical papers, and I apologise to the Paymaster General if I did not follow all that he said. I was not sure that he said much about the attitude of other member states to compliance. I would welcome anything he might say on that in reply.

I hope that in 1992 the single market created will not just be for the benefit of big business. If the single market is to achieve its purpose, small businesses must share in the benefits. The Paymaster General referred to major contracts for smaller businesses being considered. That would allow small businesses to tender for sub-contracts, a move that is welcome. Moreover, the raising of the threshold will allow many small businesses to tender for and win more contracts.

I wonder whether more can be done to bring to the notice of smaller businesses the types of contract being put out for tender in many different parts of the Community. In my own constituency, many small businesses would not be aware of possible opportunities. In these days of information technology, perhaps some central agency could disseminate information about the Community. Very often, a lot of information is fed in, but perhaps we could look at improving the dissemination of information from the centre. If that helped to draw attention to business opportunities, it would be most welcome.

The raising of the minimum level for contracts is also welcome, as it will relieve a burden felt by many local authorities. To tender and advertise on a wide scale imposes an administrative burden, as well as advertising costs. The Minister said that, under the new provisions, companies would have more time to respond to advertisements. In circumstances in which a contract has to be placed very quickly, what are the requirements? If something has to be done the day after tomorrow, one cannot expect advertising on a wide scale. However, when the time scale is 10 days or 20 days, it is a greyer area. In other cases, perhaps as a result of flooding or some other natural disaster, an immediate response is required by a public authority. In such cases, advertising fully throughout the Community is inappropriate.

I refer, finally, to the delegations proposed by the European Parliament. As I understood them, they were for contracts that had regard to programmes agreed by the Commission in connection with the long-term unemployed and young people. I cannot see anything particularly mandatory in those provisions. However, perhaps the Government could have a second look at the matter.

While it is necessary that the benefits of 1992 be shared by big and small businesses, it is most important that benefits be shared by all areas of the Community. The honeypot triangle of Paris, Frankfurt and London should not receive all the benefits. Many remoter areas also wish to share the benefits that will flow from the free market of 1992. Community programmes are involved. There need not necessarily be any question of discrimination between competing companies of different nationalities. If, for example, the contract related to the number of young people likely to be engaged in a project, I have no doubt that an appropriate tender could be submitted by a French, Italian, or British company. There is nothing inherently discriminatory that would militate against such a situation.

Mr. Dykes

Does the hon. Gentleman accept that it would be better to establish those conditions on a non-discriminatory basis in terms of the promulgation of the contract for which the tender was sought by the public agency concerned in whatever country, with the advertisements thereof in the press and elsewhere?

Mr. Wallace

I believe it would be better if those who were competing for the tender were well aware of what was involved. I would be grateful for anything the Paymaster General can say about this matter in reply.

It is gratifying that we are making progress in this area. Some worthwhile changes have been made. I hope that the Paymaster General will respond positively to the reasonable and practical suggestions of the hon. Member for Southend, East. What was suggested would import into the matter a certain degree of independent compliance. Certainly, if the matter is pressed to a vote, I will be disposed to support the amendment.

8.8 pm

Mr. Peter Griffiths (Portsmouth, North)

It is easy to express the pious hope that there will be free competition and many opportunities for companies in any country in the Community to seek to offer their services elsewhere. It is not particularly difficult to draw up directives or legislation which state those objectives and express the hopes and ideals which are unanimously supported in the House. However, it is particularly difficult to ensure compliance with those objectives when they are expressed.

I will not digress from the subject in hand, but surely it is the experience of Her Majesty's Government that it is difficult to guarantee real competition in tendering for contracts put out by public bodies, even in one country. It is difficult to avoid the feeling that there are elements of discrimination. There are elements of political favouritism. If it is difficult in one country, it will be even more difficult in Europe. Nevertheless, I welcome what my right hon. Friend said about the approach which the Community is taking and which Her Majesty's Government are supporting. The directives on procurement and compliance are a move in the right direction. No one will object to that.

Every speaker in the debate has referred to 1992 and the single European market. The directives are not specifically related to 1992. Regardless of 1992, they are essential, but they will be more important after that date, because we may expect a growth in the number of large projects which spread across national frontiers. River or tunnel projects, for example, will involve more than one Government, perhaps several municipal authorities, and other statutory bodies in different countries, all of whom will have an interest in one contract.

I appreciated the comments of the hon. Member for Vauxhall (Mr. Holland). He referred to the construction industry. The directives are not specifically related to 1992, nor are they limited to the construction industry. Public works projects of the scale envisaged in the directives will involve a wide range of industries. Therefore, they are of far greater importance than digging holes and laying bricks and mortar.

I fear that political complications will arise. They will not only be that companies based in the United Kingdom may find it difficult to obtain compliance on the mainland of Europe, although that is what we tend to think when we discuss such matters. I agree that the directives apply to mainland companies seeking opportunities in public works contracts in this country. That is to be welcomed. However, it is an important reminder for companies in this country which are worried about their opportunities to obtain overseas contracts that they must compete harder in future because compliance with the directives documents will mean that their overseas competitors will have better opportunities.

There is no doubt that disputes will arise from time to time between companies seeking to tender and authorities putting out contracts for tender. That is why I shall say a word in favour of harmonisation—a word which often raises people's hackles. This is a case in which harmonisation can only do good. The closer the contracts drawn up between countries coincide, the better. My right hon. Friend the Paymaster General said that tendering documents will be drawn up according to the regulations in member countries, as long as they are acceptable under the broad control and rules of the Commission. That still leaves a good deal of room for misunderstanding and variation.

I should like to see standard forms of tender and contract. In response to the hon. Member for Orkney and Shetland (Mr. Wallace), I should like to see standard forms of advertising. It should be recognised that project advertisements should not be geared so that they give different results in different countries. Journals and newspapers do not always have the same readership. The closer we can get to standard forms of tender, contract, and advertising the better.

It will be important to make it clear in advance to small companies that they should look for contracts not only in this country but in Portugal, Greece and places where they might not normally look. Their attention should be drawn to where they will find contracts. The associations to which many small companies belong have a responsibility to provide a service to their members to tell them where they should look for opportunities.

I commend the amendment moved by my hon. Friend the Member for Southend, East (Mr. Taylor). If disputes arise, we will be able to try to deal with them relatively cheaply. We will need a quick system so as not to get bogged down in legal systems which could be complicated because they operate in more than one country. An arbitration system could be the solution to that problem: I hope that the Paymaster General will consider that proposal. If he does not find the amendment acceptable, I hope that he will look for some quick and easy way whereby a relatively small firm can complain quickly and effectively if it considers that its genuine attempt to provide a service at a competitive cost and of the highest quality is rejected on what appear not to be purely economic grounds. I commend the directive and my hon. Friend's excellent amendment.

8.17 pm

Mr. Brooke

With the leave of the House, I shall reply to another of our admirable debates. The hon. Member for Vauxhall (Mr. Holland) has announced that he will shortly leave the House, but he has not informed us of precisely when. I hope that there will be many such debates in which he continues to take part before his departure for Fiesole. All hon. Members wish him well there.

The hon. Gentleman and I are former members of Balliol college, Oxford. The departure of any member of that category from the House is a matter of regret for some hon. Members. There was formerly in the college a club called the Hursteron Protaron club, which, once a term, lived its life exactly backwards, and started with a whisky and soda first thing in the morning and ended up with porridge late at night. In this instance, it would be more convenient for the House if I reply to the admirable speeches in their correct order rather than the reverse order.

We will miss the hon. Member for Vauxhall when he eventually leaves us. My hon. Friend the Member for Southend, East (Mr. Taylor) and I will regard him in Fiesole as one of our potential informants on developments in Italy within the Community. We look forward to dispatches from those parts.

My hon. Friend the Member for Southend, East referred to procedures. The version of the proposal as it now stands is in the supplementary explanatory memorandum. It shows the latest thinking within the Council working party. It is described in articles 1 and 2. I am replying also to my hon. Friend the Member for Portsmouth, North (Mr. Griffiths). Specifically, the review procedures are to be available to suppliers and contractors who claim to be disadvantaged. There will be notification to member states by the Commission if it considers there to be a clear and manifest infringement which could follow complaints from those who felt that they had been disadvantaged. There will be an investigation by the Commission using its own resources.

As to the question of process, the proposal is now to be considered by the Council. It can be amended at any time by the Commission or by the member states acting unanimously. It can be adopted as a whole by qualified majority voting in the Council. We do not yet know which other member states share our concerns about the proposed articles on conditions for participation and information on working conditions, but other member states have been expressing views as we worked through the matters, and a number of changes that have been made flow from alliances that we have formed with other member states.

My hon. Friend the Member for Southend, East moved an amendment on behalf of cur hon. Friend the Member for Thanet, South (Mr. Aitken). I do not wish to fall back on the traditional escape route of Ministers responding to amendments by referring to the wording of the amendment, but if my hon. Friend examines the wording, he will see that there is a touch of "Alice in Wonderland" in the provision about fair and equal rights to secure public purchasing contracts. It is the case in "Alice in Wonderland" that everyone should have prizes but it is a difficult exercise to achieve in a competitive process.

The amendment suggests arbitration as a form of administrative recourse. It would be premature to decide now whether that would be more appropriate than a system based in the courts. My hon. Friend will know of the deliberations of the House of Lords Select Committee on the matter. The proposal, as it is evolving, would allow a judicial system or an administrative system, or both. Existing remedies might suffice. On the other hand, some form of administrative tribunal or arbitration body might have advantages. That was the issue considered by the House of Lords Select Committee in its admirable report last year. It concluded that in the United Kingdom the tenderer should seek remedy in the courts. We all agree that contractors and suppliers should be provided with a speedy and effective remedy where they are harmed by a breach of the rules. That point was made by my hon. Friend the Member for Portsmouth, North.

It is essential to the proper operation of the market that companies have equal opportunities to compete for public contracts and that they should have confidence that if they are invited to submit a tender, it will be considered fairly. We will need to consider the means by which such remedies can best be provided. If it proves necessary or desirable to introduce legislation, the House will have an opportunity to debate what we propose. At this stage it would be premature to decide, so I ask my hon. Friend to withdraw his amendment. Having said that, I should be happy to receive representations from my hon. Friends when we get nearer to forming the conclusion on precisely what the remedies should be.

My hon. Friend the Member for Southend, East raised a question about costs. I agree about the importance of avoiding unnecessary bureaucracy, as I said in my speech. The process of negotiation has removed excesses in the original proposal, although I acknowledge that some difficult points remain, such as the requirement to specify the source of information on employment conditions. The basic procedures, such as making a clear decision on the requirements of contracting authorities and going to competition, are fully consistent with the principle of getting value for money. For major projects over £3 million it is not unreasonable to expect public bodies to have to go to competition.

If this is the last contribution of the hon. Member for Vauxhall to these debates, it is admirable that he fulfilled his usual tradition of raising the King Charles's head of large corporations. He drew attention again to small businesses, to which I referred earlier. The Commission's approach to disadvantaged regions is to assist small firms by other means. The Commission has spoken of a series of proposals such as an active policy on sub-contracting, but such measures would not be appropriate to a procurement directive. I acknowledge the interest of hon. Members in making sure that these opportunities are available to small business.

The hon. Member for Vauxhall rehearsed arguments of a social nature, as I expected him to do. He will know that the representations received by the Government, to which I also referred, were diametrically opposed to those that he rehearsed in his speech. As to his remarks about environmental consequences and the issue of joint ventures and acquisitions, the directive is designed to ensure transparency of fair competition and the ending of discrimination against non-national contractors. It does not and cannot deal with environmental issues.

The way in which the construction industry reacts to the opportunities that implementation of the directive presents is a matter of commerical judgment. In referring to joint ventures and so on, I was simply advising the House on what appears to be happening so far. It must be remembered that we are discussing multi-million pound contracts and that as a result of the increased transparency smaller firms will have better opportunities to operate as sub-contractors.

As this may be the last occasion on which the hon. Member for Vauxhall and I face each other across the Dispatch Box, I will remark, in a sense outside the debate, that I have been struck by the immense investment of the Japanese in research and development in the building and contracting industry. It is likely that we shall see the Japanese impose on that industry internationally what they have done to shipbuilding. I am not sure that it would not be sensible in those circumstances for European consortia to he put together to resist them.

In a characteristic peroration, the hon. Gentleman spoke of the United Kingdom's occasional isolation. On this issue we are not in a state of isolation. We have secured a number of changes already in the negotiations.

My hon. Friend the Member for Harrow, East (Mr. Dykes) made some kind remarks about my relationship with the Scrutiny Committee. He argued for a genuinely open market. I am grateful to him for what he said.

The hon. Member for Orkney and Shetland (Mr. Wallace) raised the question of compliance in other member states. They all accept our objective, but, as he says, it is a complex area. Some major hurdles have been removed by the Commission in indicating its willingness to accept changes, but there are still problems of ensuring consistency with national legal systems. One critical point is that the Commission is determined to make sure that there is a fair playing field. It is deploying more of its resources on that work and has taken a number of member states to the European court of Justice.

The principles of the compliance regime will be set by the Commission, but member states will be responsible for precise procedures. The procedures will be open and probably judicial; they will be closely monitored by the Commission. The advantage of leaving the detail to member states is that it enables account to be taken of particular national legal and administrative traditions and procedures.

The hon. Member for Orkney and Shetland saluted the Government for their achievements in reducing the burden on local authorities. On emergency projects, in the case of an extreme and unforeseen emergency, the contracting authority can take immediate action without going through the normal procedures. He joined the hon. Member for Vauxhall in proceeding to what we regard as a somewhat slippery slope in terms of social conditions in the context of securing value for money. But I like the suggestion of finding a better system to make sure that opportunities are known throughout the Community. I hope that someone will take the entrepreneurial opportunity to achieve that objective, because it seems that such an opportunity would exist.

Mr. Dykes

Will my right hon. Friend respond positively to the idea of contracts being gradually and increasingly in ecus as well as in national currencies?

Mr. Brooke

The British Government in their separate actions have shown an enthusiasm for such ecu transactions and have regarded them as a much more sensible and practical way forward.

It was a delight to have the contribution of my hon. Friend the Member for Portsmouth, North. Those of us who are the cognoscenti and the aficionados of these remarkable debates tend to become a somewhat exclusive band of brethren. It is always extremely agreeable to be joined by someone new. I will look seriously at the standardisation of contracts, because of the economic advantage that will derive from them.

I ask my hon. Friend the Member for Southend, East to consider—

It being one and a half hours after the commencement of proceedings on the motion, MADAM DEPUTY SPEAKER put the Question necessary to dispose of them, pursuant to the order [28 April].

Amendment negatived.

Main Question put and agreed to.

Resolved, That this House takes note of European Community Documents Nos. 7496/88 and the Supplementary Explanatory Memorandum submitted by the Treasury on 24th October 1988 and 5909/89 relating to public works contracts and 10497/88 and the Supplementary Explanatory Memorandum submitted by the Treasury on 2nd May 1989 relating to compliance with Community rules on procedures for the award of public supply and public works contracts; endorses the view that revisions to Directive 71/305/EEC are necessary to improve public purchasing throughout the Community; welcomes the Government's endeavour to secure a satisfactory outcome in discussions on the proposal on public works contracts in the Council of Ministers; and supports the Government's intention to press for a means of improving compliance with Community rules on procedures for the award of public supply and public works contracts which places appropriate responsibility on Member States.