The election of Donald Trump in the US was one of the biggest global news stories of 2024, but our election back in July was significant for the UK, as voters rejected the Conservative government which had been in charge for some 14 years. The feeling that it was ‘time for a change’ was overwhelming, and the last few years felt chaotic with infighting and clear incompetence in evidence from the ruling party.
However, six months into the new Labour government, initial public enthusiasm has already worn thin given tax rises, stories about Ministers receiving gifts and entertainment and some dubious policy decisions. But how is Labour doing in terms of public procurement?
In truth, it is too early to say. The implementation of the new Procurement Act was postponed from October to February 2025, and we are waiting for the ‘National procurement policy statement’ which in theory will set out the overarching priorities for public procurement.
But the early indications have not been too promising. Labour came to power promising better governance and a fight against corruption, but have done very little. The much-vaunted ‘Covid Corruption Commissioner’ has turned out to be a part-time appointment for 12 months, with limited resources behind him, and a wider brief than expected.
Other areas of potential corruption have not been tackled. The way money has been spent and some very dubious public procurement up on Teesside, which Private Eye has been going on about for years, really needs proper investigation, but there has been nothing at all from Labour. (The mayor, Ben Houchen, is a Tory, although maybe Prime Minister Starmer thinks Houchen could defect at some point – that is the only reason I can see for not taking a look at his activities).
The furore over tickets for events and gifts of clothing to politicians demonstrated a lack of awareness of how this would be perceived, and some very silly comments from Labour supporters saying, ‘oh well, everyone in the private sector behaves like that’. That received swift rebuttal from many of us pointing out that firms we worked for had pretty strict policies on such matters, and no, I’d never had a pair of glasses bought for me by a supplier!
Then we have the spending review announced in December with goal to find “efficiency savings within government spending of 5%”, which looks like an unchallenging re-tread of previous approaches. But hang on a minute, “departments will be asked to reach this figure over the three-year review period, and will be able to reallocate money saved within their budgets”. So not really savings at all then, just moving the money around to give the impression of activity!
It also demonstrated a general lack of understanding of procurement (and business generally) amongst Ministers. Not one member of the Cabinet has any real business background, sadly. The Treasury said that external experts would be brought in to help the review, to “include former senior management of Lloyd’s Banking Group, Barclays Bank and the Co-operative Group”.
Having been a procurement director in the financial services sector, I know that banks have not exactly been the best-run businesses from a procurement and general efficiency point of view. Far better to have looked to sectors such as automotive, pharma, or consumer goods to get some more advanced ideas.
A naivety about commercial matters was evident elsewhere too. To Labour’s credit, they set out plans in November to prevent companies that run children’s homes from making excess profits, as many appear to do whilst also providing sub-standard services. But the mechanisms proposed are naïve. The BBC reported that “will require major care home providers to share their finances with the government, so it can challenge what it describes as profiteering. This will also include a “backstop” law that would place a limit on those profits, which the government can put into effect if the companies do not do so voluntarily”.
But this only applies to large providers who account for about a quarter of the market. And the lack of commercial understanding comes through in the suggestion that the answer is to ask those firms nicely to charge fair prices, and take action if they are ‘profiteering’ (whatever that means).
Of course, any of us who have been in procurement for a few years can immediately think of half a dozen ways in which a supplier can disguise or manipulate profit figures. Just pay the directors more for instance… or use inter-company loans … or set up subsidiaries to move money around…
This lack of commercial experience and capability at the political level is a problem for Labour. It also suggests that the appointment of a successor to Gareth Rhys Williams as government’s Chief Commercial Officer is even more important than it might have been. Of course, one person can’t be expected to fix everything, but I suspect the new GCCO will need to spend a lot of time educating Ministers and explaining how the world of commercial and procurement matters really works.