How to deliver Labour values in government contracts

A report launched Tuesday March 10^th by the Labour Finance and Industry Group and the Society of Labour Lawyers calls on an incoming Labour Government to introduce what it calls “a socially responsible procurement policy”.   

What we mean by this is that an incoming Labour Government should adopt a procurement policy that reflects Labour values – using its £45bn a year purchasing power to secure social and environmental benefits, as well as competitive prices, when buying goods and services for the public sector.

Prepared by a multidisciplinary task force of lawyers, procurement professionals, trade union officers and business experts, our report busts the myth that only economic criteria can be taken into account when buying goods and services for the public sector.   

We cite the new EU public procurement directive adopted in 2014 which expressly requires member states to take into account the widest possible range of social and environmental considerations, as well as price, when buying goods and services for the public sector. As the Council of the EU explained, “the new rules seek to ensure greater inclusion of common societal goals in the procurement process. These goals include environmental protection, social responsibility, innovation, combatting climate change, employment, public health and other social and environmental considerations.”

If we’re honest, it is probably not unfair to say that ministers in the last Labour Government were slow to use public procurement to stimulate social and environmental improvements.  There was a tendency, albeit a reluctant one, to follow the most cautious legal advice, which held that ministers at Westminster would be acting in violation of EU rules, and running the risk of legal challenge, if they took non-economic factors into account when awarding government contracts.  Opportunities were missed to use public procurement to promote Labour values.

By contrast, the Conservative-led Coalition Government has almost gleefully cited EU rules as a reason why lowest price should be the decisive factor in awarding government contracts, while social and environmental concerns could not be considered.  Encourage government contractors to pay the Living Wage? Certainly not, they say. That would invite legal challenge under EU rules. As our report shows, this is a deliberate misreading of current and future EU law.

With a new EU procurement directive in place enabling Member States to take social and environmental objectives into account when awarding Government contracts, there has never been a better time for a Labour Government to use its massive purchasing power to deliver social value and community benefits as well as competitive prices for public contracts in the UK.

Drawing on examples of best practice from contracting authorities in Scotland, Wales, Northern Ireland and England, our Report makes the following key recommendations:

– Contracting authorities can and should evaluate bids in terms of their proposals for delivering social value, community benefits, good employment practices, enhanced environmental protection, promotion of better public health and animal welfare

– Bidders can and should be encouraged to promote equality and diversity in the contract workforce, provide for apprenticeships, and pay the living wage

– Blacklisting, zero-hours contracts and similarly abusive employment practices can and should be banned

– Bidders who are guilty of aggressive tax avoidance as well as tax evasion can and should be excluded from the tender process, as should bidders who have displayed persistent or significant deficiencies in performing previous government contracts

The next Labour Government should take a strategic approach to public procurement, with a Cabinet Minister to drive forward a socially responsible procurement policy which reflects Labour values, as the Welsh Government has done.

In place of the Coalition Government’s narrow obsession with contracting out at the lowest price, I believe that this authoritative report shows how incoming Labour Ministers can use public procurement to deliver more jobs, better pay, improved skills, vibrant small businesses, and environmental benefits – giving a huge boost to the UK economy and to our public finances. No new legislation is required to implement our main recommendations, and no new public expenditure.

If we win the General Election on May 7^th, our ambition is that this Report will provide incoming Labour Ministers with a roadmap – a toolkit – to navigate the new freedoms enshrined in the 2014 EU procurement directive in a way that will help deliver Labour values through socially responsible procurement. 

We also hope that it will provide forward-looking local authorities with the ammunition they need to pursue progressive procurement policies across England, Wales, Scotland and Northern Ireland.

Hamish Sandison is Chair of Labour Finance and Industry Group

A full copy of the Report is downloadable from the Labour Finance and Industry Group (“LFIG”) website www.lfig.org.uk. Your comments on our Report will also be most welcome via the LFIG website.