The Labour Party Manifesto and Implications for Public Procurement

So this week we will look at what the major UK political party manifestos have to say about public procurement issues. We'll take that in the broadest possible sense, otherwise frankly these would be very short articles!

Let us start with the Labour Party, as they were the first to issue their manifesto. There are three mentions of the word "procurement." We'll look at those here, plus a couple of other relevant issues that get a mention.

"We will continue to support the construction of High Speed Two, but keep costs down ..." was one of the first comments of note relating to government third-party spend. But what exactly is the alternative to "keeping costs down," we might ask? We will build HS2 and let costs spiral out of control? "Keep costs down" - my goodness, there is a meaningless statement. And how exactly are you going to do that? No answer is provided to that question. Now let's move onto small business and the p-word gets an outing here.

Small businesses are the backbone of our economy. Their creativity and dynamism are vital for raising productivity and competing in the global economy. Labour will give them a voice at the heart of government – a Small Business Administration, which will ensure procurement contracts are accessible and regulations are designed with small firms in mind. We will address rising costs for small businesses and strengthen rules on late payment.

A Small Business Administration - that sounds like another nice little quango. And just how will it "ensure procurement contracts are accessible" - indeed, what does that mean? We would give the current government some credit on accessibility, considering Contracts Finder for instance, and it is not clear how much more "accessibility" would help SMEs. And would this SBA sit outside Crown Commercial Service? That might set up an interesting dynamic.

In terms of late payment, this government has been a little half-hearted although the recent legislation following the Young review has moved things on. More could be done, but the devil here is in the detail. Now moving on to employment issues.

"Too many people do a hard day’s work but remain dependent on benefits. We will raise the National Minimum Wage to more than £8 an hour by October 2019, bringing it closer to average earnings. We will give local authorities a role in strengthening enforcement against those paying less than the legal amount. And we will support employers to pay more by using government procurement to promote the Living Wage, alongside wider social impact considerations".

Some contracting authorities, particularly in London, already stipulate that suppliers must pay the Living Wage or London Living Wage. This takes us into pretty deep economic issues around the supply and demand of labour, but I have to say my sympathies would broadly support this move. However, we have to realise that cash-strapped councils will be able to buy a lower volume of (for instance) social care services if they have to pay more for them. That means probably some unhappy service recipients and possibly some unemployed care workers.

"Those who work regular hours for more than 12 weeks will have a right to a regular contract. We will abolish the loophole that allows firms to undercut permanent staff by using agency workers on lower pay."

I don't understand this "loophole", and I don't see how you can legislate for agency workers to be paid the same as permanent staff really. And the 12 weeks idea is plain daft. What do Labour think will happen? Millions of temporary staff suddenly being made permanent? Of course not. It will mean more interim staff becoming service companies, and at the lower end of the market, more black market work, and assignments running for 12 weeks only before termination. That will increase transactional costs and will be bad news for many staff.

What about defence? Here is the final mention of procurement.

In partnership with industry, we will put accountability, value for money, interoperability and sustainability at the centre of defence procurement.

Another statement of the blindingly obvious, and nothing for instance about the Defence Equipment and Support organisation and its private sector strategic partnerships. We thought Labour might have a view on that.

There is a bit about more devolution to cities and regions, but it is so vague we can't really assess whether it might have a significant impact on procurement - why not take contracting activities away from Crown Commercial Services and devolve more regionally, for instance, which could support a real push to more regional power (and supply bases)?

In fact, all in all, there is nothing much from a procurement point of view to get either excited or indeed worried about. We have our Procurement Pub Debate on April 28th (book here), and the topic is "This (public) House believes that the result of the General Election will have no impact on public sector procurement."

I have to say this Labour manifesto probably supports the motion rather than providing evidence to the contrary!

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First Voice

  1. Alastair:

    You missed their commitment to “legislate so that a public sector operator is allowed to take on lines and challenge the private train operating companies on a level playing field.” depending upon how this is set up – ie will this operator just absorb franchises as they expire,or will they be a bidder in future franchise competitions (and therefore how will the procurement be created so that it is fair for both public and private organisations). It could aslo create a model for other services currently outsourced having to compete against an in-house provider on expiry of their contracts.

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