Look local: a new path for procurement policy?
The government has just published its new “National Procurement Policy Statement”. The title, to be fair, might not be one to get political pulses racing. But it could be the start of something really significant for communities.
For over a decade, procurement has been a key focus for Locality’s “Keep it Local” campaign. Local community organisations are very well-placed to provide the trusted, person-centred services that are crucial to driving prevention. But we consistently hear how they are shut out of tenders.
The contracts are often just too large to bid for. Or the processes are so complex that the scales are tilted in favour of multinational outsourcing companies and big national charities.
Time and again, service commissioners and procurement officers will say their hands are tied; that the procurement rules prevent anything other than seeking low-cost services through competitive tendering. This view has persisted despite loads of evidence and guidance showing that procurement rules are permissive and flexible, providing ample scope to design innovative processes which unlock community power.
This is where the “National Procurement Policy Statement” comes in. Because the signals government sends really matter. The new Procurement Act – designed by the last government but only coming into force now - chose not to take a radically different approach but instead doubles down on the procurement flexibilities that have always existed. But the risk is, in the context of ongoing spending pressures and a marketised framework, the old risk aversion and institutional bureaucracy will persist.
Busting through this will take a strong message from the centre, and that’s something we are starting to get. The new statement makes clear the policy priority is to be flexible and look local. The headline goal is to drive economic growth, and according to the new guidance, the key means of doing this is to “maximise procurement spend with small and medium-sized enterprises (SMEs) and voluntary, community and social enterprises (VCSEs)”. The rationale is that these suppliers are “more likely to generate diverse and thriving local economies, creating jobs and economic growth”.
We know this is true from our own work. Keep it Local research found that every £1 spent by a local authority with a local community organisation generates £2.50 for the local economy. Crucially, these organisations tend to be found in our most disadvantaged neighbourhoods, so this is a great way to drive economic development in places which tend to miss out on growth.
As well as being good for the economy, Keep it Local research shows how this approach provides better services for local people, as well as driving down long-term demand on the public sector. It really is a win-win for local places.
The policy statement makes some other useful emphases. It puts an onus on contracting authorities “maximising public benefit”. It stresses the importance of early engagement, which is something we frequently hear contracting authorities are wary of due to fear of legal challenge. It also talks about broadening the skill set and experience of procurement teams, so it’s not just about narrow legal compliance but understanding “how procurement can contribute to local outcomes and priorities, adopting a whole organisation approach so that policy and strategy engage earlier with commercial teams.”
But perhaps the most significant thing being discussed isn’t in the policy statement itself, but is something the Cabinet Office is said to be “exploring”. This is described by the government’s press release as “proposals for a major shake-up of spending rules, with local councils able to reserve contracts for small businesses to maximise spend within their area and help boost local economies.”
The Financial Times described these proposals as allowing “local authorities to legally discriminate in favour of SMEs in their communities” and quoted Georgia Gould, the Cabinet Office minister spearheading this agenda, as saying this would enable councils to “maximise spend within their area and help boost local economies”.
This could be a gamechanger. We have long argued that commissioning should be “local by default”. And while it’s more than possible in the current regime, not least through use of grants, it has proved hard to make it happen in reality. It requires commissioners to really want it, and be prepared to expend energy cajoling colleagues and shifting a system whose incentives go in a different direction. Indeed, we’ve argued that certain person-centred services shouldn’t be part of the competitive procurement process at all, but instead something councils and communities co-create together.
The new procurement statement starts to turn the tide. Changing the spending rules could be a transformative shift towards making ‘keeping it local’ the mainstream priority of procurement, rather than ‘a nice to have’ for those who really want to make it happen.
