Current public sector procurement rules, which require consideration of 'social good' in spending decisions, have been described as an 'absurd, wasteful, indulgent, performative and expensive mess'. The public sector's annual spending on goods and services from the private sector is estimated at around £400bn.
Historically, spending decisions and contract awards were based on cost and delivery capacity, with the Local Government Act of 1988 prohibiting attention to 'non-commercial considerations'. However, the 2010 Equality Act introduced requirements for the public sector to consider equality law in procurement. This was followed by the 2012 Public Services (Social Value) Act, which mandated public authorities to consider how spending might 'improve economic, social and environmental well-being'.
Further enhancements in 2020 imposed this duty on all central government spending decisions, incorporating a formalised 'social good' weighting into tender processes. In 2022, these rules were reportedly strengthened again, requiring suppliers to demonstrate their contribution to policy issues such as modern slavery, net zero, domestic violence, and diversity.
Andy Burnham reportedly seeks to simplify these rules, proposing a focus on job creation and skills training in procurement deal evaluations. This new agenda may involve giving more 'weight' to firms that pay above the minimum wage and offer work-from-home options.