Andy Burnham does not understand procurement
Earlier this week Andy Burnham set his stall up to become the UK's next prime-minister, with a speech which included some ideas for public procurement. Unfortunately I couldn't find a copy of the whole thing, but there's a direct quote from the FT:
"We will make sure that all eligible public contracts are subject to proper social value weighting...to make sure British companies are in a better position to win these contracts."
Both of these ideas are tired and have been around for a good while. They also do not hold to criticism - or reality for that matter. Let's take the main one, that public contracts are to go to British companies. How tired is this troupe? And how detached from reality is Burnham by assuming that is not the case already?
Thankfully we have the receipts for it. In 2021, research commissioned by the European Commission estimated that 2% of contracts up to €200M (2.3% of total value), were being awarded to foreign firms. For contracts above that value, 1.5% and 2.1% respectively.
On the run up to Brexit in 2018, a briefing paper from the House of Commons estimated direct cross-border procurement by value to be around 2.5% for 'larger contracts' and 1.7% for all other others.
There seems to be no data post-Brexit and the lauded transition to the Procurement Act 2023 and new notice system to collect data is not really giving us anything so far. So it is fair to say that since barriers have gone up, if this value moved it was only in the direction of going down. I should note that historically UK economic operators have been more successful abroad than vice-versa and one just needs to look at Ireland's direct cross-border numbers to see that effect.
As for indirect cross-border procurement, you know my view about how that is a bad metric to use for measuring openness of a procurement system within the EU since what it measures is how other elements of EU law are working, namely freedom of establishment and free movement of capital. But yes, according to that Commission's study from 2021, 14% of contracts below €200M were being awarded to foreign controlled suppliers/subsidiaries and 31.6% for contracts above that value. But here changing procurement rules won't make any difference unless you decide you want to close down the whole economy to foreign investment but that's a different ballgame altogether.
So, on the one hand Andy Burnham is disconnected from reality and doesn't understand how our international commitments work (EU-UK TCA, GPA and FTAs) because the only reading for the quote above is that he would like the playing field to be tilted in favour of British suppliers...which said international commitments are precisely designed to stomp out. Is he suggesting pulling out of those agreements then?
As I've said many times local preferences (of which this is but one kind) work like Matrioshkas. For the UK prime minister 'national' is good enough, that is as long as any UK company wins the contract that is a positive outcome. For a Welsh or Scottish government, however, their 'community benefits' or 'social value' angle is that public contracts must be won by firms based in those nations to avoid 'leakage.' Going a step further down the ladder, for a council leader in North Wales what he wants to see is the local firms (ie based on his council) winning his contracts, suppliers based in Cardiff be damned. On the long run what this leads to is atomised supply chains, composed of weak SMEs that operate as zombies dependent on local contracts. This is no recipe for growth.
On his speech, Burnham touted another tired troupe that contracts need to generate more apprenticeships. Well, if only someone had considered that before, I don't know like the Conservative government in 2015!
All in all, not an auspicious start for public procurement under Andy Burnham.
(However, Brexit is a gift that keeps on giving in this regard: before Brexit British firms won 50% of all contracts awarded to foreign economic operators and that percentage and after it only 30%. The only reason we know this is that despite all my misgivings about eForms and the PPDS, at least we have some data we can munch on.)