The UK government’s £400bn procurement budget used to deliver on key policies and projects has been squandered due to Labour’s mixed messaging on its priorities, a new report exclusively shared with City AM has suggested.
The state spends billions of pounds a day for public services, with everything from IT software to fighter jets and project management supplied by the private sector.
But a new report by a top Westminster think tank, the Institute for Government (IfG), has indicated that a “lack of coherence” between the government’s five missions, six milestones and overarching Plan for Change has taken a toll on procurement.
In an extensive report on the role procurement has on wider productivity and effectiveness in policy delivery, IfG said that a lack of clarity around Labour’s ambitions had “confused” procurers and damaged their ability to direct private sector firms towards better expenditure of taxpayers’ cash.
Researchers said ministers and senior civil servants heading up “mission boards” on issues such as reducing waiting lists at the NHS, driving economic growth and boosting clean energy should spell out how the private sector can support delivery.
They indicated improved communication around priorities would stop plans from getting clogged up or being poorly expensed.
IfG’s findings throw a spotlight on Darren Jones given his role as the chief secretary to the prime minister, which was created to accelerate policy delivery and take action on some of the UK’s biggest issues around low growth, poor healthcare and infrastructure delivery.
Jones was previously chief secretary to the Treasury, where he was tasked with quizzing ministers on departmental budgets and boosting efficiency across the government in the lead-up to the spending review.
His transfer to Number 10 shed light on Keir Starmer’s eagerness to push reforms through faster amid criticism that policies had failed to take shape after Labour’s first year in government and its “mission-led” approach to governance had fallen flat.
Labour government urged to back innovation – and failure
The report also raised questions about risk aversion in the public sector as civil servants suffer from the fears of legal challenges and added financial costs when decisions are taken, with the threat of failure in planning harming the quality of work conducted.
The IfG called on Labour ministers to drive innovation by openly defending the procurement of contracts that fail to succeed, creating more pilot schemes and handing greater powers to the Department for Science, Innovation and Technology in procurement processes.
Reforms of datasets and regulations should be implemented to make contracts easier for businesses to handle, the report also said.
“With the Chancellor facing difficult choices ahead of the Budget this autumn, the government must make the most of the £400bn it spends buying goods, works and services each year,” the report’s author Ben Paxton said.
“Using the power of procurement to shape markets, drive innovation and secure better value for taxpayers’ money will be crucial to delivering on the government’s missions.
“This will require cultural and practical changes in how the government does procurement, and ministers empowering the public sector to explore new approaches to the big challenges it is facing.”