Procurement and spending

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Commissioning and procurement are among the biggest levers that councils have in building inclusive economies.

There is considerable scope for councils to influence their local economies with their spending and ways to take spending decisions to build an inclusive focus.

In light of COVID-19, the role of councils as economic actors will be crucial in restarting local economies. Councils’ procurement spend is not cyclical – it is not directly linked to how well the economy performs in the way that business spending is. Where and how council procurement expenditure is spent therefore is of an increased importance during broader economic decline. The scale and ability of this expenditure is however dependent (at the current time) on support provided by central government and alleviating councils’ defects.

Many councils have built and element of social value into the way procurement decisions are made, requiring contractors and suppliers to work in specific ways and follow good practice for inclusive economies. Some of the outcomes sought include the following:

  • retain expenditure within the local area
  • secure real living wages for staff working on contracts
  • provide apprenticeships for local people
  • support employment charters
  • link hard-to-reach groups with employment opportunities
  • fund employment support programmes.

There is clear scope for councils to embed the inclusive growth agenda in investment and funding decisions – including where they are providing loan facilities for the purposes of economic development for example.

Case studies

Key lessons

- Local government procurement spending is a large source of expenditure in any given local economy, often the largest.

- Commissioning and procurement require political leadership to drive through a focus on inclusive growth. Cabinet members rejecting proposals with insufficient focus on the inclusive economies agenda can help accelerate culture change within procurement and wider service teams.

 - Councils have had increasing success using social value in commissioning and procurement to promote better work, better wages, better access to skills and other outcomes linked to more inclusive economies.

- Legal and financial concerns in procurement are valid, but have been well explored and largely overcome by local authorities around the country.

- Anchor institutions tend to be large procurers too, and influencing their commissioning and procurement practices can play a significant role in increasing the reach of efforts to build more inclusive economies.

- Councils can make decisions about their investment funds to ensure they only invest in projects that build a more inclusive economy.