EU procurement rules are stifling local growth, say councils
By Richard Johnstone | 14 August 2012
Councils today hit out at ‘tortuous’ European Union procurement rules that are ‘choking off’ opportunities to save taxpayers money and promote local growth.
The Local Government Association urged the government to campaign for changes to the procurement directives, which are being revised over the next 18 months.
In particular, local government leaders in England and Wales want a significant increase to the ‘ludicrously low’ £170,000 threshold above which public sector tenders have to be opened out to the entire EU. This process can take several months to complete and creates ‘a significant and costly barrier’ to shared service agreement between authorities, delaying plans that could save taxpayers millions, the LGA said.
More than 200 local authorities have already entered into shared service agreements with neighbouring councils to share back-office functions, and last week the LGA found such arrangements had demonstrated ‘clear financial benefits’.
There could be far more of these if procurement rules were reformed, according to Peter Fleming, chair of the LGA’s improvement board.
Town halls also want greater freedom to award contracts to local suppliers, including a relaxation of rules that demand contracts with employee organisations or staff mutuals be opened up to providers across Europe.
A report commissioned by the Cabinet Office from the Mutuals Taskforce has already called for council services run by mutuals to be exempt from competitive tendering requirements for at least five years.
Fleming said ‘opportunities to promote local jobs and economic growth are being missed’ under current rules.
‘Opaque internal market regulations, which fail to distinguish public sector goals from the private sector’s profit motive, are standing in the way of councils delivering better value for money to taxpayers,’ he added.
‘We desperately need the government to take the fight to Brussels on our behalf and promote a rewrite of the rules that are stifling public service innovation and limiting councils’ ability to promote growth in their area.’