Thornton & Lowe
Buying British: What does the Government’ s Procurement agenda mean for Construction Businesses?
Public sector procurement rarely makes front-page news, but since Andy Burnham became Prime Minister in July, it’ s been in the headlines week in, week out. From“ good growth in every postcode” to“ reindustrialising Britain”, the language coming from the Government has been promising. What businesses are hoping for is that these slogans are backed up with real action and spending commitments.
The new Government’ s agenda is of particular interest to construction firms that rely on public sector work, or that want to start winning more of it. Here’ s what has changed so far, what we see on the horizon, and what it all means for you.
“ Stripped back” social value
One of the most significant procurement announcements thus far has come from Louise Haigh, First Secretary of State and Burnham’ s de facto deputy. In early August, she confirmed that the Government is scrapping much of the existing social value framework. Out go criteria that ministers themselves have admitted many businesses struggled to evidence, covering everything from environmental commitments to improving high streets.
In their place comes a much narrower Social Value Model, as defined by the Government’ s PPN 026 policy note. This is built around just two objectives: good jobs and skills.
Reducing the complexity and costs associated with social value has the potential to shift the balance towards smaller firms whose on-the-ground delivery is stronger, as opposed to larger, betterresourced bidders whose ESG teams can convincingly tick the right boxes. Indeed, many construction SMEs will already be running apprenticeships and hiring locally without necessarily calling it a“ social value strategy”. A model that rewards job creation and skills development, rather than polished corporate reporting, will make it easier for these businesses to compete.
The new model is not without teeth. Social value’ s weighting is doubling from 10 % to 20 % on contracts worth £ 5 million or more, so while the focus has changed, the requirements still absolutely matter.
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