Wednesday, 2 March 2016


When spending public money, it’s important to work it extremely hard and extract every single possible benefit. We need to take a fresh look public sector procurement of goods and services in Wales and ensure that an increasing percentage of our public sector spend is targeted towards local businesses and local suppliers. When taxpayers’ money is being spent, it is important that every single possible added value be squeezed out of it and it is vital that we spend as much of possible of it as we can to support Welsh businesses. 

At a very simple economic level a sustained and encouraged ‘buy local’ campaign is a real economic must, while this will necessitate legislation to improve public procurement, it is 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. 

Again 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 it needs to be worked extremely hard and we need to maximise the economic impact every single penny and every single pound and to make sure that it works to help the Welsh economy. Back in 2013 for every £2 spent procuring goods and services, £1 of that ‘leaked’ out of Wales.  Value Wales suggested that for each 1% increase in goods or services procured from Wales, some 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 the naysayers and negatistas kick off and say that the setting targets is ruled out by European Union regulations, there is more than 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 and that’s with them both being members of the EU.

The 2012 McClelland review revealed what could 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.

In Wales we already 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 such as 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.

No comments:

Post a Comment