Public contracts such as waste collection represent £300bn of all public spending © Getty Images
Public contracts such as waste collection represent £300bn of all public spending © Getty Images

Implement procurement reforms ‘as fast as possible’

16 February 2021

Proposals outlined in the UK government's green paper on procurement should be implemented “as fast as possible” as part of efforts to strengthen competition, a report has said. 

The independent report, authored by MP John Penrose (Con), said public contracting and procurement is one of the “biggest and most economically-valuable areas that is currently held back by red tape”, in terms of competition.

Penrose said public contracting for “everything from waste collection services bought by local councils, to big capital projects like building new roads commissioned by central government, and everyday office supplies purchased by arms-length government agencies” represented a third of all public spending at almost £300bn.

The report said public procurement affected the “competitive pressures and productivity of a significant proportion of the entire UK economy”.

“Its transparency drives levels of trust and confidence in whether public sector contracts are genuinely fair and open to smaller challenger companies or charities which want to compete on a level playing field against big and long-established incumbents or not,” the report said. 

However, Penrose said the current public procurement rules under OJEU had been criticised for “being too slow and time-consuming, as well as too difficult for small firms to navigate”.

As a result, 25 of the largest firms holding government contracts have increased their share of contract value from 13% to 18% between 2013 and 2017. 

“In other words the bureaucratic and red-tape costs which they create are too big, and the result is weaker competition and worse value for taxpayers because small and medium-sized challengers are being frozen out,” the report said. 

Penrose said proposals outlined in the government’s green paper demonstrated how to achieve better value for taxpayers and how EU procurement rules could be updated and improved with a digital, faster, transparent process that is “both easier for entrepreneurial firms to compete through, and also more resilient against corruption and fraud”. 

“Given the scope and scale of government contracting, this would be a huge increase in competition across large parts of our economy. So the government should implement the broad changes outlined in the green paper as fast as possible,” he said. 

Kwasi Kwarteng, business secretary, said: “The UK’s competition laws and institutions are highly regarded across the globe, however as we build back better from the pandemic and start life as an independent trading nation, we have a golden opportunity to strengthen that reputation.

“I want to thank John Penrose for his hard work on this independent report, which considers how the UK’s competition regime can promote productivity, reward and encourage innovation and, most importantly, get consumers a better deal. We will consider John’s recommendations and respond in due course.”

Rishi Sunak, chancellor, added: “We must strengthen competition in our economy as we build back stronger from Covid-19 and protecting consumers will remain at the heart of this.”

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