‘The next step for Whitehall reform’

Andy Burnham was right to argue that government has spent too long chasing cut-price deals rather than supporting British-based suppliers to become stronger, more competitive and better able to deliver for the country.

His intervention gets to the heart of a much wider problem in how Whitehall spends public money. If we are serious about delivering the change people are desperate for, the next step is to rethink not just who government buys from, but what success looks like when contracts are awarded.

Public procurement, worth more than £300 billion a year, is one of government’s most powerful economic levers. To put that into perspective, the government spends more on buying goods and services every year than it has committed through the Defence Investment Plan over the next four years.

Yet too often procurement is treated simply as a way to buy services as cheaply as possible, rather than as a tool to strengthen British businesses, improve public services and build lasting capability inside government itself.

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Buying more from British businesses is an important part of the answer, but it should not be the end of the story. Government should reward suppliers that build capability, transfer knowledge and leave Whitehall stronger than they found it. That is how we create stronger British businesses, a more capable state and better long-term value for taxpayers.

Success is often measured by whether a project was delivered on time, not whether a department is better equipped to deliver for itself the next time around. We know the cost of everything, but too often the value of nothing.

That is why government continues to prioritise the wrong outcomes. External contractors are brought in to solve a problem, whether that means building a new digital service, modernising a legacy system or rescuing a struggling programme. They deliver what they were asked to do, the contract ends and the expertise walks out of the door with them. Civil servants are left without the skills to maintain, improve or build upon what has been delivered.

The Public Accounts Committee recently warned that the government does not even have a reliable picture of what it spends on external consultants, with estimates ranging from £1.36 billion to £2.23 billion a year. Unless departments retain the knowledge and capability they are paying for, Whitehall will remain trapped in a cycle of repeat consultancy spending.

The solution starts with asking different questions when contracts are awarded. Every major procurement process should set out, in plain terms, how suppliers will transfer knowledge, how civil servants will be trained and how the department will become less dependent on outside support over time. 

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Some departments are already showing what this looks like by backing innovative British partners that can help break the cycle of dependency. At the Global Government Forum Innovation event in March, I saw for myself the work companies are doing to transfer knowledge, build internal capability and reduce departments’ long-term reliance on external support.

One recent example can be found at HMRC, where the UK scale-up, Tecknuovo, transitioned more than 100 contractors across eight live digital services in just three weeks, reducing costs by around 18 per cent without disrupting frontline services.

The real achievement was not simply delivering the programme. It was leaving the department better equipped to manage future challenges without repeatedly buying in the same expertise.

Credit should also go to Daljit Rehal and his team at HMRC for creating an environment in which innovative British companies can compete with more established suppliers. The outcome speaks for itself: significant savings for the taxpayer alongside a stronger, more capable department. That is exactly the sort of leadership and procurement thinking Whitehall needs more of if it is serious about reform.

The strongest governments are not those that outsource delivery most effectively. They are those that use external expertise to build lasting capability of their own. Andy has started an important conversation about how government should support British business while delivering better value for taxpayers. The opportunity now is to ensure every public contract leaves Whitehall stronger than it found it. 

That would represent genuine reform.

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