In the midst of all the Brexit fracas, procurement is of course an area that is far from the headlines. Although the specifics are uncertain, Brexit is very likely to have tangible, but not transformative impacts on procurement in the UK over the long term. Impacts in the short term will be far less noticeable, however. More significant for procurement in the immediate future could be the new government, led by new Conservative Prime Minister Theresa May and her cabinet. The direct impacts of May's new government on procurement will likely be minimal, but other policy areas will certainly have effects for the profession.
For starters, it is impossible to not mention Brexit, as this will form the basis of so much policy up until the next election, scheduled for 2020. Negotiations to leave the European Union will be long drawn-out and impactful, with significant changes to all manners of life and economy, not excluding procurement. Steadying the ship clearly must be the priority of May in the short-term, with suggestions of her response being a full industrial strategy, as well as scaling back of austerity under new chancellor Philip Hammond. Procurement is likely to be at the heart of implementing any industrial strategy, whilst changes to the austerity doctrine could mean less strictness on procurement spending.
Since Thatcher swept to power in 1979, the UK has been absent of an industrial strategy, with bringing about the success of manufacturing industries being the responsibility, rightly or wrongly, of the markets. There have been mentions of major investments in areas such as energy, housing and infrastructure. This would impact procurement in two ways.
Firstly, it is obvious that large-scale industrial strategy will need large-scale procurement processes and a lot of expertise. This could create jobs in the industry, but could also pose the challenge of moving experienced staff away from other important procurement projects that deliver results to front-line public services.
Secondly, the procurement conducted is fundamentally different - being involved in the management of a small number of large projects is a totally different game to being in charge of numerous smaller projects. The procedures will likely be different - at the most basic level, there would of course be greater importance of the Utilities Directive.
Beyond this, there is scope for public-private partnerships (PPPs). With future projects likely to be different in substance and scope from prior projects, it would seem likely that Crown Commercial Services would release further procurement policy notes for this.
If public money and government oversight is involved, any major projects would need to follow public procurement rules, likely relating to utilities. However, an industrial strategy based around simply easing the obstacles for foreign or domestics businesses to invest will require less public procurement involvement. Perhaps this would mean more private sector procurement job openings.
A big uptick in infrastructure investment certainly will come with challenges. With a big increase, it is not clear that there would be the experience in the UK to deliver this optimally. With underinvestment in major infrastructure projects over several decades, there simply may not be the public procurement professionals with experience of major construction or engineering projects that have been more commonplace in countries such as France or Germany. With HS2 and Crossrail, there is some expertise in railways, but much less in areas such as large energy or road building. Nonetheless, large investments will be underway, with heavy involvement from procurement professionals and domestic and international suppliers.
One pertinent example highlighting the complexities of large public investments is the recent delay to the Hinkley Point nuclear power station. Having been planned for years, the contract to begin construction of the £18bn plant was about to be signed at the end of July when the government delayed the decision until the autumn, pending further review. On the flip side, Parliament did vote to renew the Trident nuclear weapon programme, ensuring there will be one huge and highly sensitive procurement programme needed over coming years.
The personnel in May's new cabinet of ministers presents some interesting outcomes for procurement. The key role for procurement is the Minister for the Cabinet Office, a role which includes overseeing major changes to procurement policy and guidance and has significant influence over Crown Commercial Services (CCS) and their agenda for policy and guidance. Ben Gummer has been appointed to this role, replacing the relatively popular and uncontroversial Matthew Hancock. Although substantial changes to procurement regulation will be decided by Brexit negotiations and not Gummer, he retains some influence over some of the daily decisions regarding procurement regulation and best practice, predominantly through CCS procurement policy notes. Nonetheless, Gummer is an unknown entity, with little to no history of engaging with public procurement and very little known about his policy stance. Furthermore, he made minimal mention of the profession upon appointment, reducing this duty to overseeing "bulk purchasing". Not many procurement professionals will be too impressed at the nearest thing to a procurement minister viewing the profession in such simplistic and transactional terms. Incidentally, Gummer also seems to be opposed to greater devolution, with his voting record being against giving powers and funds to devolved and local governments, whilst his voting record is mixed regarding environmental and sustainability issues.
It is also worth considering some of the specifics of Theresa May's relationship with procurement and how she has engaged with particular issues. In her role as Home Secretary, there were three that jump out.
Firstly, May herself, seems to be more of a continuation of the devolution trend. Under the stewardship of Cameron, as well as Brown and Blair before him, government policy shifted towards putting power in the hands of devolved administrations in Scotland, Wales and Northern Ireland, as well as pushes towards greater financial and policy influence and autonomy for local governments and schools. The position of May on all of these topics is not entirely clear, but suggestions are that she will not buck the trend. She has been an advocate of localising powers of police commissioners for example, as well as pushing academisation of schools and has expressed the importance of devolved administrations in the eventual Brexit deal. Conversely however, May's voting record has steadily been for cutting funding to local governments.
Secondly, May has been highly critical of police in the UK, including the management of procurement. Previous comments revolved around the legacy IT systems and disjointed procurement of policing across the UK. The message was that procurement operates in silos between different constabularies and that having more joint procurements, joint purchases and perhaps even pooling of procurement teams and resources would allow police services to be more cost-effective and deliver betting policing outcomes. This pooling of teams and resources has been developing throughout the public sector for the past few years. This trend generally makes sense and it would be a positive development for public procurement to be less atomised and for price variations between similar bodies to be minimised, as well as achieving economies of scale.
Third is modern slavery. In her time as Home Secretary, May fought fiercely against modern slavery and has already taken this impetus into her new role. Just weeks into her premiership, a £33m International Modern Slavery Fund was set up, with the intention of driving out the UK's contribution to modern slavery. So far this has focused on immigration controls, but also on transparency of the impacts of medium and large businesses and their supply chains. Although yet to shift towards the public sector, it is likely that procurement policy notes will be released over this Parliament to improve best practice and increase transparency of the impacts of public procurement on modern slavery when sourcing goods and services from around the world.
Many developments over the next four years of this government will impact the industry in a range of different ways. But the last major legislation was only implemented in 2015 and remains governed by the EU, for now at least, meaning that substantive new legislation is very unlikely. The personnel within government may have their own policy agendas and priorities, meaning minor legislative changes are certainly possible, be it devolution, supply chain transparency or further SME policies, which May seems keen on. So it would certainly seem that the impacts of the new government on UK procurement are pretty mild. Lucky really - with EU departure approaching and all the potential impacts on procurement that it could entail, not rocking the boat might just be sensible.
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