There is much to commend Plaid Cymru’s Plan C which concisely and clearly identifies the linked nature of economic renewal and economic recovery necessary to get our country back on its feet economically. Simply relying on the failed models of economic development and redevelopment to get our country out of the economic hole that we are in just won’t work. We need to change Wales and break the link with the economic consequences of the financial crisis which was largely caused by the banking sector.
A ‘buy local’ campaign is a real economic must, this will necessitate legislation to improve public procurement, something that can provide real opportunities for Welsh based business within the procurement chain – potentially this could create some 50,000 new jobs. Significantly improved local procurement policy can create and secure jobs, boost employment levels and help small to medium sized enterprises in many of our communities.
At a very basic level it comes down to maximising the local economic opportunities from the £ 4.3 billion pound public sector spend in Wales – which is used to procure and purchase goods and services. There have been some real improvements when it comes to public procurement over the last ten years, but, there is still room for substantial improvements to be made. The increase in Welsh procurement of goods and services from 34% in 2003 to 52% (June 2012) something that follows extensive efforts by Plaid Cymru as part of the One Wales government (between 2007 and 2011).
If we are going to spend public money then we need to work it hard and maximise the economic impact every penny and every pound and to make sure that it works to help the Welsh economy. At present for every £2 spent procuring goods and services, £1 of that immediately ‘leaks’ out of Wales. Value Wales has suggested that for each 1% increase in goods or services procured from Wales, around 2,000 jobs are created.
So if we can achieve a local public spend of something close to 75% then potentially some 46,000 additional jobs can be created. The impact of a well thought out and implemented public procurement policy is something that could economically give and give again. This is the crux of the matter, it could be a real win win situation for Wales, potentially cutting unemployment by around a third or about the same number as the increase in unemployment that we have suffered since the recession began.
Before people kick off and say that the setting targets is ruled out by European Union regulations, there is a enough freedom of action to significantly increase procurement from firms (based in our country) to 75% within the existing rules. There are more than enough examples of this from elsewhere in Europe where in Germany and France some 98% of the value of public contracts are won by companies within their borders.
The 2012 McClelland review shows what can be accomplished with good examples of best practice. The review recommended legislation to ensure that public bodies involved in the public procurement process are required to appoint specialist procurement officers, and that Welsh Government guidelines are followed.
We have some excellent examples of public procurement including the Arbed scheme to improving housing energy efficiency where 41 of the 51 companies involved in the scheme (80%) were based in Wales. Other good examples are the Church Village and Porthmadog bypass contracts which were agreed when Ieuan Wyn Jones was Economy and Transport Minister where local training clauses were used to good effect.
Local procurement and business opportunities can be boosted encouraging contracts that are ‘small’ and ‘unbundled’ as well as maximising opportunities for consortia of small local firms to bid for larger contracts. Better thought out public procurement contracts can include public benefit clauses which can boost the chances of local firms winning bids and contracts rather than ending up automatically rejected or excluded from participating in the procurement process.
There is no reason why commitments to local training, carbon footprint reduction and the use of the Welsh language cannot be built into public procurement contracts where they are appropriate. There could be a knock on effect from all of this aside from local economic gains as the investment in skills and companies will provide spin-offs across the country delivering improved employment rates. More jobs and more secure jobs will boost wages as business success grows there will be more opportunities for better training and improved business practices.