‘Procurement must be at the heart of our growth agenda’

Let’s face it: procurement doesn’t strike many of us as a sexy topic, and we might instinctively shrink away from conversations about it given how technical and dry it can appear. But the reality is that it should be on all of our lips, because it touches all areas of public spending and therefore everything that those of us in the political sphere are passionate about.

Government is the biggest buyer in the economy with gross public sector procurement reaching £461 billion last financial year, an amount roughly equivalent to the annual GDP of Sweden. Every pound shapes outcomes that matter to people at home, from the medicines our hospitals use to the infrastructure our communities depend on.

For all its scale, procurement is still too often treated as an administrative function, with success judged largely through short-term savings and compliance with processes. All of us, procurement professionals or not, should be asking much more than whether we get a ‘good price’ for what government buys.

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The cross-party APPG for Public Sector Efficiency, which I chair, has spent the past year working on broadening this discussion. The report of our Global Commission, published last week, draws on findings we gathered from fourteen countries and sets out sixteen recommendations across six main themes. The TLDR is that procurement should be treated as a strategic capability of the state: something that can shape markets, underpin investment, boost resilience and result in lasting benefits for our economy and society.

With the Budget around a week away, the timing matters. If growth is the Government’s defining mission, securing greater returns from money already being spent should be central to it.

At present, traditional value-for-money assessments simply are not capturing the wider benefits of public spending, including jobs, skills, regional growth, innovation and supply chain depth.

Our report suggests a Public Growth Test for strategically significant procurement over £2 million, requiring departments to set measurable economic, social and strategic objectives before a contract is awarded. Alongside it, a Public Growth Account would report what major programmes actually deliver. Together, these would close the gap between what is promised and what is achieved.

These commitments must sit alongside, not in place of, effective delivery. Benefits to growth cannot compensate for poor performance, delay or failure.

Government can also do more to shape the markets it buys from. Our report recommends designating a small number of national strategic markets aligned with the Industrial Strategy and supported by a five-year public demand signal. Canada’s Industrial and Technological Benefits policy is estimated to support 40,400 jobs and more than C$5 billion of GDP annually. France and South Korea give suppliers forward visibility of state demand. Predictable, funded pipelines give businesses the confidence to invest in skills, capacity and innovation at little to no extra cost to government.

Social value commitments face a similar problem. Suppliers routinely promise apprenticeships, local employment and SME spend at tender stage, but evidence suggests these are often watered down after the ink is dry and the customer (in this case the state) stops looking. The Commission calls for a national Social Value Delivery Standard, enforceable remedies for material under-delivery, and published supplier performance records. Of the fourteen countries examined, none publishes such a record, so the UK has the opportunity to lead here.

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COVID-19 and geopolitical volatility have exposed the fragility of procurement models that were designed for the rapidly disappearing warm bath of stability that we have become far too accustomed to. Supply chains should now be recognised as matters of national security. The report proposes a National Supply Chain Security Centre to consolidate intelligence on critical suppliers; and a National Criticality and Resilience Test requiring every strategic procurement to answer two questions: what happens to the UK if this supply chain fails, and how quickly could it be replaced? The costs of disruption should be priced explicitly into value for money. We all know that a lower upfront price is a false economy if it leaves essential services exposed.

So much of this depends on better data. Commercial information is fragmented across departments and systems. A Government Commercial Intelligence Platform, built on common standards and supplier identifiers, would allow risks and opportunities to be identified earlier. Where AI can achieve proven productivity gains, that capacity should be reinvested in higher-value commercial work rather than simply banked as savings.

The Commission found that, reassuringly, Britain’s commercial expertise is still respected well beyond our borders. Throughout the Commission’s work, other governments made clear they continue to look to the UK for leadership. UK-led international buying clubs and shared commercial standards would strengthen collective purchasing power and extend Britain’s influence over the standards by which global suppliers operate.

The report does not call for wholesale reinvention. It proposes a phased approach: establish ownership, standards and data foundations; pilot reforms in selected markets; then embed what works across government. Each recommendation should have a named owner, a timetable and measures of success focused on outcomes rather than activity.

That means thinking about the outcomes we want from public spending from the outset, and giving those responsible for buying the skills, data and support to deliver them.

The question is no longer simply what government spends. It is what that spending creates for people, places and Britain’s security.

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