Local Government Procurement

Brandon Lewis Excerpts

Wednesday 16th January 2013 Westminster Hall

[The Parliamentary Under-Secretary of State for Communities and Local Government (Brandon Lewis)]

I congratulate the hon. Member for Denton and Reddish (Andrew Gwynne) on securing the debate. He is right; local authorities can be market shapers and are uniquely placed to support local jobs and business growth in their areas. They understand their local economies. They have links to local businesses and can work with both public sector and private sector partners to create the conditions for growth. Councils with planning powers can shape their local market, driving regeneration and growth. That will be increasingly important and advantageous for them with the new business rates retention scheme.

I will explain where I have a difference of opinion. We must ensure that we procure efficiently and effectively, and councils can decide to use the money locally as part of driving growth, but procurement is not about engineering their areas. Procurement should be about good procurement. I will come to that specifically in a moment. We have to trust councils, as part of localism, to get on with it and not be tempted, as central Government, to fix it for them or to direct them too far on how they spend money locally.

Councils are almost always one of the largest spenders and employers in their local economies. Local government as a whole holds assets worth more than £230 billion and, as the hon. Gentleman rightly said, last year spent about £60 billion on directly procuring goods and services. That is a substantial amount of money. Many local residents will take the view in relation to that £60 billion spend—this would be the same for any business—that if we can save just a couple of per cent, councils will be able to spend more money on front-line services. They must ensure that they use that money efficiently and effectively for local residents.

By making life easier for small local businesses to bid for and win council contracts, which the hon. Gentleman touched on, and by being cleverer about how they use their spending power, local authorities throughout the country can do more to stimulate local growth. The Government have taken significant steps to support councils to embrace their role as supporters of the local economy. We have introduced a number of reforms to free town halls from Whitehall bureaucracy and give them the tools to help with the difficult challenge of driving growth. We have done that by providing strong positive financial incentives for local authorities and communities to support and encourage local housing and business growth—for example, by allowing them to keep a share of business rates.

We have supported local enterprise partnerships. We have allocated £730 million to them to support local development. There is substantial planning reform to ensure that planning policy supports growth. We are providing greater financial flexibility locally, so that there is greater scope to support local economic growth. We are providing £1.4 billion of direct support through the regional growth fund. We have agreed city deals and announced Portas pilots to revive local high streets.

We are also taking a number of steps to support local authorities directly in using their spending power to support and boost local economies. For example, we have established the contracts finder portal and created simplified pre-qualification questionnaires, which are free for use by local authorities. Those make it easier and cheaper for small and medium-sized firms and the voluntary and community sectors to bid for public sector opportunities.

We have also taken steps to deal with the recognised commissioning skills deficit in local government. The commissioning academy will provide development on commissioning skills for up to 2,000 public sector employees over the next three years. That will be supplemented by the establishment of an online home for public sector commissioning expertise and learning, so providing all local authority officers with access to free learning materials on commissioning.

Clearly, central Government cannot deliver better hands-on local procurement. What we can do is create the right conditions by eliminating unnecessary red tape, as my hon. Friend the Member for High Peak (Andrew Bingham) said, and by removing barriers to local innovation. It is for local authorities themselves to take the initiative in their local areas. The general power of competence in the Localism Act 2011 gives them far more power than they have ever had before to do just that. I look forward to more and more local authorities taking advantage of the opportunities that that general power gives them.

There are some very good examples out there. I want to touch on a few, including the local council of the hon. Member for Denton and Reddish. There are some very good examples specifically at Tameside metropolitan borough council, which has been particularly proactive in stimulating local procurement with Meet the Buyer events and initiatives such as the Tameside Business Family and Tameside Works First.

Hon. Members touched on Manchester more generally. The north-west procurement portal and supplier training events are also excellent examples of pooling procurement expertise and making it simpler for SMEs and local businesses to tender for public sector contracts. The result has been a widespread shift to more local procurement spending across the entire north-west. As hon. Members will know, Manchester city council has shifted 10% of its current spending from non-local suppliers to local suppliers, so generating many millions of pounds for the local economy.

Eleven local authorities and 11 other Hertfordshire-based public sector organisations have grouped together using the collective brand Supply Hertfordshire. A web portal advertises all contract opportunities for member organisations. That includes regular e-mail notification for suppliers.

[Mr McKenzie]

Does the Minister agree that collaborative procurement offers not only savings, but greater opportunities to provide such information as contract monitoring?

[Brandon Lewis]

The hon. Gentleman makes a very good point. Working together produces an awful lot of benefits; he is right about that. They include spreading best practice and being able to buy in a larger critical mass and therefore get a better purchase price.

There are many good examples out there. I have mentioned what Hertfordshire is doing with small and medium-sized businesses. Waveney district council has simplified its tender documents to encourage third sector organisations, as well as small businesses, to tender for contract opportunities. Its objective is to reduce the maximum time for suppliers to complete a tender response to one hour. That kind of practice makes life much easier for businesses that do not have the capacity to take on some of the larger tender documents that we have seen in the past. We need to make contract opportunities more accessible in such ways.

I again thank the hon. Member for Denton and Reddish for initiating the debate to give us all a chance, through the record of Hansard, to highlight to local authorities that want to take notice of what they could be doing. Their members can look at what other authorities are doing and challenge their officers to go further and faster on this journey.

[Rory Stewart]

Will my hon. Friend the Minister touch on the question raised about Cumbria and, indeed, the local charity question more widely? What could local authorities do to help procurement in relation to local charities against national charities?

--- Later in debate ---

[Brandon Lewis]

My hon. Friend tempts me into allowing central Government to dictate to a local authority what it should be doing—we get criticised for that—but I will say to him that authorities have the general power of competence. They can look around at some of the very good work that I have just touched on, at Waveney, Hertfordshire and Tameside, and see how to simplify the process. That will ensure that a local charity does not have the problem that such charities have had in the past, when I was in local government, of having to say, “We can’t bid for this. We haven’t got the staffing levels, because it takes days to understand these forms, fill them in and negotiate.” The forms for these contracts should be simple and straightforward. Any of us should be able to read and understand them and take part in the process. Local authorities still have some way to go with that. That leads me on to my next point.

[Jonathan Reynolds]

I am listening to the Minister’s speech, and he seems genuinely to be an enthusiast for the role that local authorities can play in shaping their local economies. Is he in any way concerned that the financial situation that local government faces, which is a fact—this is not the time to debate whether it is right or wrong—is limiting their ability to do that and is to the detriment of getting this country back towards growth and jobs for everyone, which is what we all want?

[Brandon Lewis]

No, I do not agree with that. The hon. Gentleman mentioned cuts earlier. The Labour party has announced £52 billion of cuts in the Department for Community and Local Government budget and has not itemised any of them. We have to be realistic about that. Actually, the situation should drive local authorities to want to do better with procurement, to free up money to use on services rather than procurement.

Councils can now do many things to improve procurement, and many authorities need to go much further. They can consider abolishing requirements to complete a pre-qualification questionnaire for contracts below the EU threshold. They can publish all their tenders and contracts online, build up a supplier network and engage with suppliers in the way some already do. They can stop gold-plating on equalities. Equality impact assessments are not and never have been a legal requirement. Officers can use their judgment to pay due regard to equality without resorting to time-consuming, bureaucratic, tick-box exercises. Breaking up contracts into smaller bite-sized chunks or using subcontracting can open up procurement.

Local authorities have a key role in supporting their local economies through procurement. Councils can take steps to use their spending power to support economic growth, but procurement processes need not be complex. All councils can simplify them, as I have outlined, and make future contract opportunities easier for small businesses. Making those changes will also save councils money by reducing unnecessary red tape and bolstering business rate returns. There is an in-built incentive for local authorities to do that now. Some councils have grasped that and made great strides to help local businesses to bid effectively for contracts, but the majority have a long way yet to go. They owe it to local taxpayers to rise to that challenge.