The Autumn Budget is just a few days away, but there is plenty of speculation about what it’ll contain and how changes will affect public sector services and procurement. We’re going to look at how procurement can help the government meet some of its budgetary objectives, especially infrastructure investment, healthcare innovation, sustainability, and social value.
Social value is particularly important because an effective initiative can meet several objectives simultaneously. For example, suppliers can employ locals, implement on-the-job training, or offer apprenticeships to address unemployment. Indirect effects could include a healthier local economy and urban regeneration through improved community relations.
Government’s Spending Priorities In 2024-25
Spending indicates the government’s priorities for the coming year. It’s expected that health will get the lion’s share with £179.6 billion, followed by education with £84.9 billion, and defence with £32.8 billion.
Most of the procurement budget will go to the central government, but local governments will receive a significant portion to address local issues, particularly education, social care, and infrastructure.
Government departments are allocated funds based on the importance and extent of their functions, as well as the type and number of priorities. This is great for suppliers with niche products, services, or works because they will likely have more opportunities to bid on contracts in their field.
Key Spending Areas
There are four key public procurement spending areas likely to be included in the budget.
- Healthcare and social work: The budget is expected to include medicines, medical equipment, and enhanced care services, such as local care facilities.
- Construction and Engineering: Government procurement spending on infrastructure that prioritises hospitals, schools and roads.
- ICT: A growth sector prioritised primarily for the digitisation of government bodies, but also for technology needed to update and facilitate public services.
- Utilities and Waste Management: A renewed focus on public services, including water and energy management and reducing waste to ensure healthier societies and meet the government’s net zero goals.
These strategic priorities guide contracting authorities in engaging with suppliers and enhancing national procurement practices, focusing on value for money, social value, and continuous improvement.
A deeper look at …
Housing: Government is adding £500 million to the existing budget to bolster the Affordable Homes Programme. This brings the total housing budget to £5 billion.
Schools: The budget will provide £1.4 billion to rebuild decaying schools.
Childcare: Government-funded childcare will receive £1.8 billion, while school-based nurseries will get an additional £15 million. The budget for free breakfast clubs will be tripled to £30 million.
The Procurement Act 2023 And Government’s Goals
The Procurement Act 2023 is designed to revamp public sector procurement to ensure simpler regulations and compliance requirements, greater transparency, and accountability. This new procurement regime, introduced by the recently passed Procurement Act, aims to address accountability and efficiency in government purchasing practices.
What this means for Labour’s Budget is that the nature of the Act ensures public money is spent efficiently, effectively, ethically, and openly. The government intends to use these qualities to raise the quality standards of goods, services, and works, and drive economic growth – partly by encouraging SMEs to enter the market.
Georgia Gould, Parliamentary Secretary for the Cabinet Office Labour, issued a statement that said a new National Procurement Policy Statement (NPPS) will replace the previous UK government’s procurement policy. They want to unlock public procurement’s full potential to ensure it meets the government’s priorities and supports its missions.
Moreover, competition in government procurement can reduce costs while increasing value for money – always good news for budgets. As more suppliers enter the market, competition and innovation increase, keeping prices reasonable.
However, government departments must remember that contracts aren’t awarded on price alone. They must consider overall value, especially when it enhances the public good.
Note: Northern Irish procurement arrangements are excluded from the National Procurement Policy Statement, highlighting the distinction between regional procurement policies.
Awarding Public Procurement Contracts
The Budget is expected to be tight, so central and local government councils will have to do more with less – again. They’re being asked to ‘challenge’ themselves to reduce spending and increase savings.
Suppliers who provide the most value for money (cost, quality, performance) definitely have a competitive edge in the procurement market. Things buyers are likely to consider in their decisions to award contracts include:
Transparency and accountability: These are hugely important in the new Procurement Act and will likely feature strongly in the Autumn Budget. The government wants to ensure complete transparency in procurement proceedings so the public can see how, where, and when contracts are awarded and delivered. The aim is to demonstrate that all contracts are fairly evaluated and above board.
Contracting authorities are accountable for their decisions and actions throughout the procurement process, from pre- to post-tendering.
Efficiency: Streamlined procurement processes improve efficiency and productivity while reducing costs in procurement delivery.
Innovation: Competition in public sector procurement motivates suppliers to be more innovative in their services, goods, and works. This can help SMEs with more flexible procedures than larger enterprises.
Risk of non-delivery: How reliable are suppliers? Do they have a track record of successfully delivering contracts on schedule, or is their past dotted with complaints of non- or partial delivery?
Impact on outcomes: Perhaps they deliver on-spec with the desired benefits. But what happens over the long term? Will the results still be positive or degrade over time? This is a question of quality. Buyers should look into the long-term results of other completed contracts.
Suppliers must have an impeccable track record of timely delivery and long-term quality. The aim is to focus on positive outcomes as councils are encouraged to adopt outcome-based approaches to spending and procurement.
Public value: This is essentially social value because it relates to the public good. Essentially, investment in infrastructure and other key areas should include non-financial outcomes, like environmental sustainability.
What Is Social Value In Public Procurement?
Social value is often spoken of as an undefined capacity to improve the well-being of communities. However, it’s more specific than that.
Social value consists of three elements: Social, Economic, and Environmental. Each of these includes a range of outcomes. For example:
Social outcomes include:
- Increased community safety
- Better accessibility to services
- Improved health and well-being
- Commitment to equality and diversity
Economic outcomes include:
- Local and inclusive employment
- Earning a living wage
- Skills training and apprenticeships
- Diverse, ethical supply chain
- Building strong local economies
Environmental outcomes include:
- Reduced carbon emissions
- Reduced water consumption
- Better waste management
- More sustainability in procurement
Many outcomes are priorities for the UK government, which puts public procurement in a powerful position to deliver anticipated post-budget objectives.
Social Value’s Importance In Delivering Budget Objectives
There are several examples of local councils emphasising social value and using it to achieve budget objectives.
Manchester City Council automatically includes a social value element of 20% in all procurement contacts, which helps achieve national procurement policy goals.
Bristol City Council also has a social value element at 20%, but its Social Value Policy aims to spend at least 40% of its procurement budget on micro businesses, SMEs, social enterprises, and the voluntary sector – all likely priorities in the new budget.
These are just a few examples of compliance with the Social Value Act 2012 and the new Procurement Act 2023. They’re just scratching the surface of what social value can achieve when helping local authorities strengthen communities and deliver impactful environmental outcomes.
eSourcing Platforms Facilitate Procurement Reform In The UK
The Act simplifies procurement, but some tools, like eSourcing platforms, make it even easier. eTendering, eProcurement, and eSourcing platforms benefit buyers and suppliers in the national procurement market.
They provide a centralised location where buyers can publish contracts of all sizes. Contracts can be adjusted to meet changing requirements, like those brought by procurement reform.
Suppliers can register and enter their details, which will be stored so they can use them time and again. No more time wasted manually adding company details for each contract.
Many platforms provide templates with features that ensure buyers and suppliers always comply with industry and contract regulations.
Delta eSourcing provides these benefits and a deep dive into the Procurement Act 2023. There are interactive webinars, buyer skills sessions, and PASS Training. PASS is an online course that helps buyers understand everything the Act entails, including compliance requirements and transparency across the whole-life-cycle.
Delta eSourcing enables suppliers to earn Accredited Supplier certification. An independent third party assessment of your business readiness; a beacon that gives you a competitive edge when buyers evaluate your bid submission.
Delta eSourcing Leads The Way In Public Procurement
Delta was the first eSourcing solution in the UK. We’ve seen a lot of procurement reforms and national procurement policy changes come and go and each time we’ve demonstrated our ability to adjust to new regulations and requirements. As a result, we’re skilled at facilitating change for our buyers and suppliers.
Register now and learn what Delta eSourcing does for Procurement Reform. Enjoy support services that help you adjust to procurement in light of the upcoming budget. Change doesn’t need to be scary, at least not with Delta eSourcing in your corner.
