Public spending: it ain’t just about efficiencies

In November last year, I was delighted to be asked to give evidence to the communities and local government committee inquiry into local government procurement. The session gave Cles the opportunity to highlight the work we have been undertaking over the last five years on local government spend and how to use it for creating great economies, lives and places.

The government last week published its findings of the inquiry and an associated set of conclusions and recommendations. On first glance, there is the same old, prosaic nature to them. They are missing some key points. The recommendations point towards a need for local authorities to use procurement to achieve value for money (efficiency); a need to collaborate across boundaries (efficiency); a need to simplify processes (efficiency); and a need to engage better with private organisations on outsourced contracts (efficiency).  Where is the progressive virtuous  ambition, which we and many others are so keen for?

For me, there is too much about using local government procurement to achieve efficiencies and to mitigate the impact of the cuts as opposed to advocating a progressive new future around local government procurement being used for local economic and social benefit. The report does not get to grips with what many in local government are doing. Manchester council and Belfast council, amongst others, have used procurement as a lever to create local economic wealth and importantly create jobs.  In this, there are a number of concerns.

First, procurement is not simply a transaction. It is a process which goes right from the design and commissioning of a service through to the monitoring of the impact of that spend in economic, social and environmental terms. There should therefore be a defined understanding of the key considerations of what an effective purchase is, regardless of whether it is being undertaken by central government, local government, an NHS Trust or a private business. Of course cost should be a key factor, but so should providing a great future role for our public services, as well as fairness, equality, and the opportunity to create local employment and develop local businesses.

Second, procurement is not the same everywhere you go. Different services and goods lend themselves to different means of purchasing and a localised approach is not always the most efficient or effective. Some goods in particular need to be purchased in bulk to enable economies of scale (energy, communications, stationary etc); while others lend themselves to a process where wider local economic and social value can be achieved. There should therefore be a defined understanding of what constitutes ‘influenceable’ and ‘non-influenceable’ spend.

Third, procurement is not just the domain of local government in place. There are a range of anchor institutions within a locality which purchase goods and services to a significant value (NHS trusts, universities and colleges, housing organisations, police authorities, and a host of others). There is a need for a place-based vision and approach to procurement and the creation of wider local economic and community wealth that sits across those organisations and importantly local enterprise partnerships. Cles is currently working on such a vision with Preston council and a range of institutions in the city to increase levels of spend with local business and potentially create co-operatives to deliver appropriate public services.

Procurement should not be a narrow corporate function restricted to local government, nor is localism its primary concern. It sits at the heart of what we want and need from our public services in the future.  Of course it needs to focus on efficiencies, but effectiveness in supporting growth, addressing poverty and inequality and creating great places is the real prize.