A new report titled New Values: Local Public Contracts for Networked Social Prosperity by Localis is urging councils to use the upcoming Procurement Act to drive social prosperity through local public contracts. The report calls on councils to tailor commercial contracts for neighbourhood services to better meet local economic needs, such as supporting small businesses (SMEs) and opening training pathways for residents. The Procurement Act, which is set to take effect in February, promotes a more holistic approach to public spending through the concept of “most advantageous tender,” enabling councils to foster inclusive growth and social prosperity.
Emphasising Value for Money
Under the new Procurement Act, councils will be required to balance the insourcing, outsourcing, and hybrid models of service delivery to ensure the best value for local communities. Localis advocates for councils to adopt a “local service reshoring model,” where administrative responsibilities are handled by arm’s-length bodies, while service delivery is outsourced to local agencies, private companies, or third-sector organisations.
Dynamic contracting is another recommendation made in the report, where contracts would include mechanisms to review and adjust terms periodically, ensuring local economic and social needs are continuously met.
Addressing Council Capacity and Accountability
With the focus on insourcing and the limitations posed by council capacity, the report urges local authorities to collaborate by establishing or using existing delivery vehicles. This would allow for better strategic control of public contracts, enhancing their impact on local prosperity. Councils are encouraged to work together to overcome capacity gaps and take greater control of public services through innovative procurement models like Local Authority Trading Companies (LATCos).
The report further highlights the importance of accountability, pointing out that while councils may have ambitious goals, a lack of capacity and the complexity of procurement legislation have hindered effective service control.
Recommendations for Central Government
To help councils navigate the complexities of the Procurement Act, the report includes key recommendations for central government. These include conducting economic and social impact studies to better direct local strategic capacity and providing clearer legal definitions and scenarios under the new legislation. Additionally, the report stresses the importance of implementing a capacity-building program for council procurement departments to help them handle the increased complexity and transparency of public contracts.
Experts Weigh In
Callin McLinden, the report’s author and a senior researcher at Localis, emphasised the importance of the Procurement Act, noting that its postponement has left many local authorities in a state of uncertainty. McLinden added, “The Procurement Act is set to reinvigorate the procurement framework, unlocking greater potential for local contracts to drive socially prosperous outcomes.” However, accountability gaps and complex legislation could continue to hinder councils in taking full control of public services.
Justin Galliford, CEO of Norse Group, stated, “Smart procurement is about more than just contracts, it’s about creating long-term value for communities and promoting local growth.” He also pointed out that models like LATCos provide councils with the benefits of insourcing, including greater service control, while operating in a more commercial environment.
Jonathan Werran, Chief Executive of Localis, commented on the Labour Party’s commitment to public procurement reform, stating that the government can be expected to integrate environmental, social, and employment considerations into local public contracts. Werran stressed that the £72 billion annual spend on local goods and services must be used strategically to ensure that localities fully benefit. This will require robust training programs to equip council procurement teams with the skills needed to navigate the increasingly complex public procurement landscape.
