Value added: how better government procurement can build a fairer Britain

Government contracts Government procurement Public value Government expenditure United Kingdom

Procurement is the UK government’s largest expenditure, valued at £284bn. Influencing how this money is spent represents a significant opportunity for government to shape the nature of the wider economy. The report suggests that more deeply embedding social value into the procurement process for the provision of goods, works and services could help tackle aggressive tax avoidance.

Through social value-based procurement, the government could more effectively ‘buy economic change’ and also encourage suppliers to adopt best practices such as employing people on a real living wage, reducing carbon emissions and using more inclusive recruitment strategies.

To discourage government suppliers from using international tax agreements to reduce their tax bill, Demos is calling for several measures – including minimum standards for public procurement to include criteria relating to a bidder’s exchequer contribution. For example, bidders could have to meet a certain Effective Tax Rate to pre-qualify for that procurement round.

Main recommendations:

  • The government taking advantage of existing provisions in EU competition law so that companies do not gain an unfair advantage over their competitors by using international tax arrangements.
  • Government establishing priority social value standards for departments in order to pursue select, strategic cross-government objectives, for example related to fair tax practice and carbon emissions.
  • The three central government departments with the highest procurement spend (Department of Health and Social Care, Ministry of Defence and Department for Transport) creating a Small-Medium Enterprise (SME) advisory panel to make it easier for SMEs to bid and win contracts with them.
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