Public procurement shapes our economy – we must put social value at its heart
Electrician apprentices in Barrow-in-Furness, Cumbria (Credit: Richard Saker / Alamy)
4 min read
Andy Burnham’s first speech as Labour Leader made the case for good growth. Yesterday’s Cabinet Office announcement on public procurement can be an important step in delivering that vision.
For too long, procurement has been treated as an exercise in securing the cheapest contract. However, saving money on paper, can push risk down supply chains, weaken local economies, discourage skills investment, and reward business models that do little to support long-term resilience.
The Prime Minister is right to argue that public contracts should support local supply chains and regional economies. His emphasis on “good growth” speaks to the challenges the country faces: building homes, upgrading infrastructure, delivering clean energy, and creating better jobs.
Doubling the social value weighting for major government contracts, focused on jobs, skills, apprenticeships and work placements, shows ministers recognise procurement can help shape economic outcomes. Simplifying the rules for smaller contracts should also help SMEs compete without disproportionate bureaucracy.
But if social value is to be more than a slogan, implementation and focus on the right issues will matter. It cannot simply mean adding worthy language to contracts or including hard-to-measure commitments. Social value must be geared to useful, practical outcomes.
This is the test policymakers should apply. When public money is spent, does it create and sustain high-quality employment? Does it strengthen the skills base needed to deliver major projects? Does it raise standards, rather than undercutting responsible employers?
These questions matter because procurement shapes markets. Public clients set expectations that ripple through supply chains. If procurement rewards only price, the market will respond. If it rewards skills, safety, employment standards and local impact, those outcomes become part of project delivery.
The Joint Industry Board (JIB) for the electrotechnical industry shows this in practice. Through a long-standing collective agreement between employers and Unite the Union, the JIB supports fair pay, welfare standards, competence verification, direct employment and fast dispute resolution.
The JIB covers almost 600 employers in the electrical and built environment sectors and since its creation has supported over 500,000 apprentices into jobs. The JIB’s work is underpinned by a digital competence and verification scheme, the Electrotechnical Certification Scheme, which provides real-time verification of skills, knowledge, experience and behaviours for around two-thirds of the UK electrical workforce.
A skilled, stable workforce is not a “nice to have” but essential to deliver the infrastructure which this country relies upon and which currently needs rapid upgrading after years of underinvestment and delays in planning and approvals. Social value, when it delivers fair employment standards, good training, direct employment and effective dispute resolution can help projects run to a higher standard. This long-term outlook, particularly around investing in skills and apprentices, can help unblock the nation’s infrastructure backlog. Too often the blockages have come long before a spade is in the ground.
However, procurement reform must not mean loading vague obligations onto employers. The best approach is consistent and industry designed. Responsible employers, including SMEs, need proportionate rules linked to outcomes they can deliver.
There are examples to build on. More than 50 councils have signed construction charters with Unite, committing to direct employment, industry-recognised pay and conditions, union access, apprenticeships and safe working practices. The JIB has supported officials to ensure these new reforms recognise those employers doing the right thing.
The Prime Minister is forcing a new focus on place-based growth. To keep more economic value in communities, procurement needs to support local supply chains and long-term workforce development. It should sit alongside a commitment to quality.
The government should build on today’s announcement by establishing a consistent approach that rewards responsible practice. It should work with industry bodies, employers and trade unions to identify and roll out proven models like the JIB. And it should ensure social value commitments are measured through tangible outcomes, not just good intentions.
The opportunity is not to create a new system from scratch. Successful models already exist. The task now is to recognise them, learn from them and use procurement to spread good practice across the economy.
Baroness Alexander is a Labour peer and former Scottish Labour leader
