Prime minister Theresa May said the strategy would help create conditions for successful businesses to grow ©PA Images
Prime minister Theresa May said the strategy would help create conditions for successful businesses to grow ©PA Images

UK industrial strategy 'fails to address procurement'

27 November 2017

The government’s industrial strategy white paper has been criticised for not addressing the role that social value should play in public procurement.

Peter Holbrook, CEO of Social Enterprise UK, a trade body, welcomed the paper but described it as a “step forward when what is needed is a step change”.

He added: “It is bewildering that the government has chosen not to address procurement and particularly social value in the industrial strategy given the support for this across the business community.” 

The white paper, released today, is part of the government’s plans to prepare the UK economy for leaving the European Union. It sets out a plan to boost the UK economy, improve productivity and embrace technology and includes a number of public procurement initiatives.

It outlines four “grand challenges” the government wants to address, including the rise of artificial intelligence, clean growth, the future of mobility and an ageing society.

The paper was announced alongside an Industrial Strategy Challenge Fund worth £725m over three years that will help fund innovations in these areas, including £170m to transform the construction centre and £210m to improve early diagnosis of diseases. 

UKPIA, which represents the oil refining industry, called the strategy a “missed opportunity”. 

“Today’s announcement acknowledges the importance of partnership between industry and government to deliver a new, modern industrial strategy for Britain,” said UKPIA director general Chris Hunt.

“Whilst recognising that the white paper represents a first step… we urge government to remain cognisant of the essential role of key sectors and value chains in driving prosperity and growth across the country.”

The paper was cautiously welcomed by the Energy Institute (EI), a professional body for the energy industry. Louise Kingham, EI CEO, said: “It’s reassuring to see a focus on nurturing the people and innovations needed to take the UK economy beyond Brexit and beyond carbon.”

The white paper was promised by prime minister Theresa May early in her premiership and elaborates on many of the themes previously outlined in the industrial strategy green paper published earlier this year.

May said: “[The strategy] will help create the conditions where successful businesses can emerge and grow, and support these businesses in seizing the big opportunities of our time, such as artificial intelligence and big data, whilst also making sure our young people have the skills to take on the high-paid, high-skilled jobs this creates.”

The strategy outlines plans to use public procurement as an important source of finance for innovative businesses. “The essential role played by infrastructure means our investment decisions can have a transformational effect on places businesses and society,” the paper said.

“We will maximise the contribution that such investment can make to growth and productivity by strengthening considerations of broad strategic outcomes at the earliest stage of policy… and then carrying them through all subsequent parts of the design and procurement process.”

It also name checked a number of upcoming programmes, including the Transforming Infrastructure Performance programme, Transport Infrastructure Efficiency Strategy and the Transport Infrastructure Skills Strategy, that would help reduce procurement costs by building long term collaborations with industry. The programmes would “support the increase in innovation, skills, businesses growth and earning power”.

While the report did not mention social value, it did outline plans to roll out balanced scorecards, already used in some projects, to ensure social and economic objectives are considered in all major construction and capital investment. 

The government also wants to improve procurement standards by extending the Commercial Capability Development Programme, a scheme to improve commercial skills in the public sector, to arm’s length bodies. 

Public procurement, which is worth £270bn a year, will also have a role to play in improving innovation. The white paper included plans to improve digital procurement platforms, including with the Crown Commercial Service’s already announced Crown Marketplace, in a bid to make government contracts easier to access. 

The paper said the government would align the Small Business Research Initiative, an existing initiative to connect the public sector with businesses that have potentially innovative solutions, with the industrial strategy’s “grand challenges” to help procure innovative solutions.

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