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28.12.16

A united approach for local government procurement post-Brexit

Source: PSE Dec/Jan 17

Paul Bell, national officer for local government at Unison, looks at the long-term impact of Brexit on public sector procurement, and what councils should be doing to plan ahead for the period of uncertain change.

The decision of the UK’s electorate to leave the EU undoubtedly presents massive challenges for local government. Post-Brexit, we are likely to face a long period of uncertainty and this follows the massive budget cuts triggered by the government’s austerity agenda, with billions of pounds and nearly 700,000 jobs cut. 

The full implications for Brexit are neither understood nor known. But ‘Brexit means Brexit’, so we all need to prepare for what is about to happen. However, given that most councils are under-resourced, overstretched and in some cases at breaking point, there is little chance they will have any employees available to work on planning for Brexit. 

Engagement and planning 

That said, Unison believes engagement and planning are vital. Councils and combined authorities will need to assess the impacts of how, what and why they procure. This is while working with their trade unions, the Association for Public Service Excellence (APSE), the respective local government associations across the UK and others on a clear, united approach to how services in local government are procured and delivered. 

Before that planning can start, it is important to see where the EU currently has an impact on funding procurement activities. 

For example, protecting river corridors, ensuring exchange programmes continue where young people learn about democracy in other countries, and developing business opportunities for minority communities. Great uncertainty exists over EU structural funds and how they will be replaced.

Understanding EU funding 

Local authorities need to understand how much money they receive from the EU and how to lobby to replace this lost funding. This is if they want to protect these kinds of services. According to the House of Commons Library, the UK was due to receive £5.3bn in EU structural funds in the 2014-2020 programming period. If Article 50 is triggered in 2017, you can do the maths. 

Under current procurement rules, everything over a certain value has to go to tender. It is unclear how the Great Repeal Bill, once it sweeps away the European Communities Act (1972), will absorb the procurement regulations that we use for major purchasing decisions. Finding political consensus will be a huge challenge. It is, therefore, quite unlikely that two years will be enough to agree new legislation, and so councils will find it difficult to make accurate financial and procurement decisions. 

In 2013-14, the UK public sector spent £242bn on procurement of goods and services. The legal framework for that originates in the EU, along with some limited domestic legislation. This framework covers a range of services such as energy; waste; employment; the environment; air pollution; consumer protection; workforce and employment; health and safety; and trading standards, regulatory services as well as state aid and public procurement. 

So the key questions local authorities need to ask include: 

  • What is procured?
  • Where is it procured from?
  • How is it funded?
  • How will lost funding be replaced?
  • Who in the council is monitoring the Great Repeal Bill and considering its possible impacts on the local community?
  • Once EU procurement rules no longer apply, how will each council adopt procurement policies that ensure transparency and fairness?
  • Who are your suppliers, including second and third tier?
  • How will your local small to medium-sized supply chains be affected?
  • What are the opportunities to invest in the local economy and workforce? 

Then there is the human cost to the workforce. Councils not only need to consider their own directly-employed staff, but also the impact they have on the wider local economy, planning for schools, housing and the NHS. A large proportion of migrants work in social services and the health sector. With an ageing population and increased demands on social care, the question is how will demand for support staff be filled, once freedom of movement is a thing of the past? 

Finally, local government finance is in crisis because of state-imposed austerity. Austerity is a political choice. In order for Brexit to work, austerity needs to end and all parts of the supply and delivery chain, including the workforce and suppliers, must join together to make that future one of mutual benefit. Without this, both service providers and employees will feel the pain.

Tell us what you think – have your say below or email opinion@publicsectorexecutive.com

Comments

R Dooner   23/01/2017 at 08:56

It's absolutely right to highlight the importance of how and where public authorities spend public money. Local authorities control over the money they spend is an important factor in leveraging the impact of that money, be it invested in services, spent with third parties, or used to support others through onward funding or grants. The trouble is, its very rare for a local authority to receive a cheque these days that doesn't have a whole load of rules and caveats attached. The more rules there are, the less the authority can do; whether by procurement or otherwise. Whether that cheque comes with an EU label or whether its from somewhere else, matters less than whether its available in the first place, how much there is and what you're allowed to do with the funding - and the EU does not have the monopoly on fettering local government by bureaucracy. It would be better all-over if the whole thing were simplified through de-hypothecation. Yet the notion of 'my budget my rules' is proving a hard habit to break - even when the parties are supposed to have common objectives and otherwise get on fine. If after all that, the local authority has a bit of discretion in how to spend the money, there's a process. There always will be. If it's a procurement it's governed by local contract procedure rules which attempt to influence behaviour in a manner supportive of UK procurement rules and the authorities own priorities, given its structure and operational environment. The UK rules are often referred to as 'EU regs' - but that's deceptive as there's hardly any cross-border trading involving UK local authorities. So called EU rules are fully transcribed into UK law and are all ours. The EU reference would be more correctly described as 'rules developed by UK policy makers acting within the EU alongside others and coming up with practices that were commonly agreed and brought home to assist with the operation of free trade agreements'. 'EU regs' is easier. The point is that the rules are ours and always have been. They might look a bit different if they were solely developed here; but not much. So, the point of all this? I'm not sure that the rules are what we need to get excited about. The much more important impacts of Brexit are: 1. The continued flow of funding into each local authority and 2. How changes in UK and international trade affect markets and the price and availability of goods and services here. Both of which are yet to play out. Whatever the outcome, procurement will do what it is asked to do.

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