How can procurement help deliver Labour’s missions?

There’s been a lot of talk about public sector reform recently – we’ve been talking about public service reform as we wrap up our Future Public Services Taskforce, Pat McFadden’s been talking about civil service reform, and the Prime Minister’s been setting out his Plan for Change to reform government through a mission-led approach. There have been some big ideas, but there’s been one area that hasn’t had the attention it deserves – procurement reform, and how it can be used to help deliver Labour’s missions.

At Demos, we’ve long been supporters of a mission-led approach – in fact, the economist Mariana Mazzucato popularised the concept in a 2011 Demos paper. It’s a key part of our vision for ‘liberated public services’. Missions would provide bigger, longer-term, cross-cutting policy goals for government as a whole, helping to tackle recurring policy problems like silos, short-term thinking, and a lack of strategic focus. We know the new government has embraced this approach, but the question will be how to make it happen.

So far, the focus has been on how spending on public services should be prioritised to deliver the missions. In Starmer’s speech, there was only one mention of spending through public sector procurement, even though this accounts for a third of public spending, at over £300 billion. But don’t mistake that for a lack of interest from the Government – it may not be as headline grabbing, but behind the scenes the Government is working on embedding the missions into procurement too through pushing back the commencement of the Procurement Act 2023 to February 2025 and consulting on a new National Policy Procurement Statement (NPPS).

Our recent report looked at reforming one aspect of procurement which could be used to support the missions – social value, which is the requirement for commissioners to use public sector contracts to deliver wider social, economic and environmental benefits, beyond the specific goods or services being delivered by the contract. If done well, the missions could provide a steer to contracting authorities as well as suppliers on where to focus their social value efforts.

‘If’ being the keyword there – once again, we come back to the question of how to make it happen. As Keir Starmer sets out measurable milestones for the missions as part of his ‘Plan for Change’, he will have to consider how rigid these milestones should be. In our report, we highlighted a central tension for policymakers when looking to deliver specific outcomes through procurement between consistency and flexibility – do you develop strong standards that suppliers must follow to create consistency and clear guidelines, or do you enable flexibility in how suppliers deliver social value, tailored to their specific context?

From speaking to suppliers, we know that the social value landscape can feel overwhelming, with a lack of standardisation meaning that many find themselves responding to each contract anew, which can be time-consuming (especially for smaller suppliers). This creates a lack of consistency in how social value is being delivered, and consequently how we measure it. We simply don’t know how much social value we’re actually delivering as a country, which isn’t particularly conducive to evidence-based policymaking.

At the same time, what would create the most social value differs from place to place, even from person to person. Allowing for flexibility means that social value can be tailored to the specific context, but also gives suppliers room to innovate. We don’t want standards to be so restrictive that we don’t listen to what people that are meant to be benefiting from social value really need and want. We believe we need a middle ground between consistency and flexibility – to liberate procurement as we have called for public services to be liberated.

In a liberated vision, to deliver the missions through procurement, you can use the different levels of the system to find the middle ground, with more consistency at the top, filtering down to more flexibility at the bottom. Devolution is key to this: central government sets the overarching missions for the whole system, regional government creates a set of standards (informed by the regional context, including through citizen participation), and local government adheres to these standards, but with enough flexibility to tailor to their specific contexts. 

As it puts plans in motion to deliver the missions, and works on reforming procurement, the Government must balance big picture thinking with the practicalities of delivery, and find a middle ground that allows us to deliver the missions in a way that meets citizens’ needs (defined with input from citizens themselves), but also has a level of consistency that allows us to answer the £300 billion question: have we really delivered the missions?