UK Gov Procurement Secures National Interest

Introduction

Thank you Nick for that introduction…

And I want to thank the D-Group…and all of your members

Not only for inviting me today….

…But also for everything you do to bring businesses, experts and government together to consider the big challenges facing the country.

And procurement falls squarely into that bracket…

…..Because how we maximise our £400bn a year procurement budget -

….and how we ensure that procurement becomes a lever for growth, not a barrier to it

…..is one of the major questions facing this Government

I'm delighted that procurement is, finally, moving out of the political shadows and into the spotlight

In the last few months alone, we have made three major policy announcements:

First, to ensure that procurement does much more to protect our national security, core industries and supply chains…

Second, to make flesh our commitment to deliver a 'wave of insourcing' in public services

And third, to reshape the system so that SMEs and VCSEs get a fairer crack of the whip.

In the last few weeks, the next Prime Minister has also made clear that procurement reform will be at the heart of his plans to re-industrialise Britain.

So today, I want to set out the path we've been on over the past two years…. and the steps we've taken to ensure government procurement delivers in the national interest.

The case for procurement reform

From pretty much the moment I took on this brief - some 10 months ago - I was left in no doubt…whether from businesses, charities or…frankly everyone I spoke to….that our procurement budget was not punching its weight.

You will all have seen countless examples of this.

Of great British companies losing out on government contracts to those who don't have our best interests at heart - even in sensitive sectors like defence, energy or AI

Of brilliant SMEs unable to afford even to submit a bid, let alone win one

Or of the innovative tech start-up, or the scale-up….who has decided to leave the UK because time after time the door to government contracts remained shut.

One example that lives with me was when I visited a brilliant domestic violence charity in my Brighton constituency….

…..they told me that it had cost them £30,000 and taken months simply to bid for a government contract….

They didn't have a dedicated procurement team - why would they? - so not only were they at an immediate disadvantage against other bidders….

……but they had to divert money and resources from the front line simply to stand a chance of winning a contract.

I simply could not defend a system like this….

…..Where too often government contracts go to those who have the people and budget to submit the most polished - and lowest - bid

…Rather than to those who are most innovative

…Most rooted in local communities

…Or best positioned to deliver local services, growth and opportunity.

So the reforms we've announced over recent months have been underpinned by three principles:

First, that government procurement should do much more to support British businesses

Second, that it should help build a fairer economy

And third, that it should be simpler, and open doors for small businesses, start-ups and charities.

Backing British business

In each area we have made progress.

A few weeks ago, we issued new guidance to all government departments to use the national security powers in the 2023 Procurement Act to direct award, where appropriate and lawful, certain government contracts to British companies.

This will apply initially in four sectors critical to our national security:

Steel

Shipbuilding

The Energy sector

And AI

And today we are going further….

…..by publishing a new Policy Notice that will mean, in future, all government contracts using steel will have to confirm whether they are using British steel, or explain why they are not.

Taken together, this will see more government contracts in our core industries going to British businesses….

….And it shows that we are using procurement to better protect our national security and resilience.

Going forward, I would like to extend these policies much more widely….backing British business wherever we can…..

But this is a big step forward…

It will mean a great deal to British businesses and workers in these sectors…

And it is a change I am proud we have delivered.

Building a fairer economy

In order to ensure procurement helps build a fairer economy…

…..we've also added extra weight and meaning to social value requirements - which in my view have too regularly become a tick box exercise and a barrier, not a boost, to SMEs and VCSEs.

Indeed, we're currently working with businesses, unions and the voluntary sector to deliver a new, more robust definition of social value.

This will - for the first time - put the views and aspirations of local communities at the heart of procurement decisions.

….And it will also finally join up procurement policy with other government schemes such as the Youth Guarantee and wider apprenticeship reforms

Alongside this, we're delivering on our promise to bring more public services back into public hands.

…..Now, this won't be turned around overnight.

For decades successive governments have allowed - whether by ambivalence or design - a policy of outsourcing by default.

The result has been that our public services have been hollowed out and sold off to the lowest bidder….

…..With our communities and working people paying the price.

That's why, just a few weeks ago I introduced a new Public Interest Test

This means all Government departments will now publish robust insourcing strategies…

….and will have to publicly justify any future decision to outsource government services.

The aim here is clear and explicit: to end the age of outsourcing and, in the medium to long-term, bring these services back in house.

To underline that…..and to show that we will practice what we preach….

….the Chancellor and I also announced that we intend to bring the Government's security and cleaning services, which covers No10, No11 and the Cabinet Office as well as 83 buildings around the country - back in-house.

Again, I am not pretending this is everything.

But it is a start.

And it is a downpayment on the progress I believe we can make to ensure procurement rules deliver greater fairness and social justice.

Simplifying and open up procurement

In order to simplify the system and make it easier for SMEs and VCSEs…

…the third principles behind our reforms…

…..we are currently reviewing the entire procurement process, front to back, to see which burdens and duplications can be removed.

The reason: I have heard time and again how the complexity, duplication and endless form-filling of the current process is among the biggest barriers to new bidders….

….And that the more paperwork there is, the longer the odds against the small, the innovative and the charitable…

So, if a burden or a procurement process is not essential, it will go.

We will enforce a "Tell us Once Principle" so that bidders only have to submit their information once - rather than starting from scratch each time.

We will harness AI tools to quality assure and generate commercial documents, saving bidders' hours of time.

We've tightened late payments rules - one of the major asks of SMEs

We've allowed local authorities to reserve below-threshold contracts to local suppliers, meaning more money stays in local communities…

….And we've set new and ambitious targets for Government to spend over £7bn through direct procurement to SMEs by 2028.

We're also working with voluntary groups, charities and start-ups …

……both on a new definition of social value and to tear down the barriers that are currently blocking them from getting the golden government contract that can be the difference between survival, growth and extinction.

Conclusion

Again, there is much more to do to simplify and open up the system -

……and the very fact that I have ordered a front-to-back review of the entire procurement process makes clear my view that we have not cracked this nut yet….

But on this, as with wider procurement reform, real progress has been made over the last two years to make sure Government procurement finally works in the national interest.

To back British businesses and protect national security

To build a fairer economy

And to ensure procurement is a lever for growth - especially for SMEs, start-ups and charities.

I know, as procurement moves further into the political spotlight, there is much more we can do together.

And I look forward to discussing this further with you today. Thank you very much.