Published the very next day after this Carillion inquiry, the second report I have sought to bring to the Assembly’s attention is by the National Audit Office, and chronicles a complete failure of understanding, both by NHS England and Capita, of the services they were attempting to transform. In one of its starkest conclusions, the report states that in this botched delivery of back-office NHS functions, lives could have been put at risk, and it was lucky that they weren't. In Wales, we have proactively staved off deep private sector involvement in our public services, but we've been pragmatic. After all, we are not hostile to the private sector—there is much that public services can learn from their drive and innovation—but we are clear that public services are there to serve the public, and not shareholders. These values are central to why they were created, and what they seek to achieve.

Devolution has been referred to as a policy laboratory, allowing different parts of the UK to pursue different policy directions and to learn from each other. In that spirit, today’s motion calls upon the Welsh Government to publish an analysis of the lessons for Wales from these two reports. Starting first with the Carillion report, what struck me wasn’t just the rotten corporate culture, but the utter failure of both internal and external checks and balances, supposedly designed to prevent malpractice of this magnitude. From KPMG, Deloitte and Ernst & Young—three of the big four accountancy firms, who together monopolise the audit market and each of whom were paid 'lucrative fees', in the phrasing of the report, in return for their 'badges of credibility'—to the individual actions of the chair, the finance director, the chief executive, the Pensions Regulator and Financial Reporting Council, as the report itself says,

'Carillion became a giant and unsustainable corporate time bomb in a regulatory and legal environment still in existence today.'

We must proactively address an environment in which firms like Carillion and Capita have been able to proliferate. Likewise, the report on the delivery of primary care support services by Capita marks out the recklessness of a cost-driven, rather than outcome-driven, centralisation of services—services that were outsourced before any of their complexities were fully understood. Clearly, in a bid to save money, the NHS in England jumped too soon into a delivery model that was inherently unsuitable, and then put the operation into the hands of a private contractor. When it comes to something as important as health, the consequences could have been dire. Fortunately, in this case, the worst possible fallout appears to have been avoided, but the residual ramifications are still being mopped up. We need to be wise to both of these issues: how acute pressure of budgets may mean decisions are made in haste and without clear forethought, and the need to address the inadequacy of our procurement system that has allowed these monolithic companies to dominate. And we must do this as we navigate through some of the biggest challenges of our generation: Brexit and automation.

I have spoken on a number of occasions about the financial pressures councils face and the lure this will present to private sector firms, all too quick to offer ways of automating jobs and services in order to free up resources, without understanding the complex nature of the services provided, and with scant consideration of the consequences if things go wrong. We can already see that happening in some parts of Wales. Capita, for example, already delivers contact centre and control room operations for South Wales Police, employing automated services, ostensibly to, I quote,

'help speed up the decision making process for call handlers and therefore improve overall response times to incidents.'

I can’t help but think this is PR speak for cost cuts. If we continue to allow automation to be driven by private sector profits, there's only one possible end in sight. If we allow this approach to take hold, all talk of automation will be seen by the workforce as being driven by cuts, and it needn't be. If we harness automation, we can use new labour-saving devices to free up staff to work on the front line, to improve public services. That's the debate we need to have. And Government needs to mobilise, right across its whole breadth, to face up to how we can use these new technologies to help us with the problems that we know we have to tackle.

The second lesson from these reports we must speak of is that, while we haven’t let Carillion and Capita hoover up public service delivery contracts to the same extent as England, we are all well aware that our procurement processes need transformation. The drive to reduce administrative costs, coupled with a shortage of procurement skills, has limited Welsh local government ability to restructure procurement practice, and has led to the domination of large-scale, privatised companies. However, transforming procurement strategy will require public institutions to shift away from the conventional transactional approach towards capacity building. They will need to become partners in procurement practice, not just one-off purchasers of goods and services. Participants on both sides of this new style of contracting will require significant support. Action to bolster the foundational economy and efforts to use procurement policy to support local producers will help redress this domination. The recently published economic strategy is disappointing in this regard.

Although the economic impact of Brexit is likely to be profound—and this mustn’t be underestimated—it could end our obligations to follow EU procurement rules, depending on the terms of future trade deals. This could present the ideal opportunity to fashion our own rulebook on the public purchase of goods and services that will allow us to break up impenetrably large contracts and better support local firms.

These reports are clear warnings of the dangers of relying on too-big-to-fail corporate monoliths that put profit before public interest. Devolution does allow us to learn the lessons from each other, so let us learn that. Diolch.