UK ‘over-reliant’ on large public contracts, says Taxpayers’ Alliance

21 Aug 17

The UK is too reliant on big public sector contracts and needs to improve competition to ensure good value for money, according to the Taxpayers’ Alliance.

Analysis published by the alliance today shows the UK spends almost double the rest of the EU combined on large procurement contracts, and much less on smaller ones.

Its Reforming Public Procurement report notes that the UK published 167 contract award notices worth €100m or more in 2015 but argues the use of such large public contracts has limited the ability of small and medium size businesses to compete. This means there is less competition and an over-reliance on outsourcing to very large companies like Capita, Atos, G4S and Serco.

In contrast to the UK the EU member with the next highest number of €100m+ contract was France which reported just 29, Italy had 25 and Germany 5.

Jan Zeber, policy analyst at the TaxPayers' Alliance and author of the report, said: “From staplers to warships, public procurement regularly accounts for approximately a third of total public spending.

“It is therefore crucial that value for taxpayers is at the heart of all public-sector purchasing decisions, no matter whether it's a multi-million-pound military vessel or stationery for the Cabinet Office.”

The TPA suggests tenders be broken up to allow more businesses into the process and improve competition.

The alliance also suggested the civil servants overseeing the tenders tend not to have a business background and may lack key skills and capabilities needed to secure cost-effective deals.

The report states “In many places [in the civil service] there is a shortage of commercial skills necessary to effectively negotiate contracts, monitor their performance, understand the language and mindset of the contractors as well as the wider commercial objectives of their department.”

The TPA acknowledged that addressing this skills shortage would be difficult because of the squeeze on public spending and the pay cap.

A Government spokesperson said: "It's important we procure products and services that offer best value for money to the taxpayer. We are strongly committed to supporting small and medium-sized enterprises, both directly and through the supply chain."

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