Contracting duties

Wilf Stevenson on why government procurement plans sit uneasily with a supposed commitment to localism

At this stage of a parliament, the conventional wisdom is that both Houses will be tidying up the main initiatives of the previous few years, and holding Ministers to account through questions and short debates. But the Coalition government does things differently, and despite there being around only 40 sitting days until the general election is called, Peers are having the dubious pleasure of ploughing through new bits of legislation.

Among these is the Small Business, Enterprise and Employment Bill, which runs to 12 parts, 157 clauses and 11 schedules, and contains provisions on a range of policies which span the responsibilities of eight Whitehall departments.

One aim of the Bill is to help our small businesses compete better in public sector procurement – something which Labour supports. We are committed to build an environment in which business can flourish, which is why we can support the general purposes and principles of the proposals. But the Bill and Coalition policy more broadly will not resolve the underlying problems which hold back small businesses in our economy.

So we look in vain for measures in the Bill which would help build a better-balanced, sustainable recovery, with a wider range of flourishing businesses, paying wages which increase earnings in real terms and providing jobs of quality and opportunity.

One issue – to be debated today at Committee – serves to make the point. Clause 38 would impose duties in respect of functions relating to procurement upon ‘contracting authorities’ – including central and local government, the devolved administrations, Police, Fire and Rescue Authorities. It also provides Ministers with powers to issue guidance relating to those regulations, to which contracting authorities ‘must’ have regard. That could be used in various ways to impose obligations relating to efficient and timely procurement, contracting processes, information flow and documentation

The problem is that this is a strongly centralising measure from a government which has both preached the virtues of localism and built on work done by Labour to make it happen in practice. The 1999 Local Government Act put a ‘Best Value’ duty on local authorities. The Public Service (Social Value) Act 2012 meanwhile, places a duty on them to consider how the services they commission and procure might improve the economic, social and environmental well-being of their area.

We will argue that authorities should have a greater regard to promoting local growth and development when considering contractors, and abide by the principle of giving back to the community throughout the procurement process. One of our amendments calls for successful contractors to guarantee an appropriate number of apprenticeships.

The common fear among organisations concerned with the government’s plans is that the powers will be used to centralise procurement and introduce a one-size-fits-all approach – something that would militate against the use of local small businesses and suppliers. Councils can already claim to be the best performing part of the public sector when it comes to procurement. They pay prime suppliers on time and place almost half of their business with local SMEs.

Why would Ministers want to do a policy u-turn and throw out all of this good work? Their own adviser, Lord Young of Graffam, pointed out in his report in May 2013 that some £230bn is spent each year by the public sector. It’s a no-brainer that an increased share of that spend could go to SMEs, transforming their activity and profitability, and contributing to growth and recovery.

Lord Wilf Stevenson of Balmacara is Shadow BIS Minister in the House of Lords. He tweets @Missenden50

Published 14^th January 2015