Procurement is rarely the most glamorous part of government, but it is one of the most consequential. The state is the UK’s largest buyer, and the sums involved are enormous: the House of Commons Library says public sector procurement accounted for about a third of total public spending, with £395 billion spent in 2024/25. Other figures cited by campaigners and industry bodies put annual public contract spending at more than £380 billion, underlining just how much economic power s...
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its in the hands of ministers, officials and public bodies.
That scale matters because procurement is not simply about paying for goods and services. It shapes hospitals, schools, roads, digital systems, defence capability and the wider industrial base. Yet it has too often been approached as a back-office discipline, judged by whether a department complied with rules or shaved a little off the price. That narrow view is increasingly out of step with what government is trying to achieve.
The case for a broader approach has been sharpened by a series of policy changes and by growing pressure on the public finances. Under the Procurement Act 2023, value for money is no longer confined to the cheapest compliant bid. The shift away from the old most economically advantageous tender framework towards the most advantageous tender model was intended to give public buyers more room to weigh social, economic and environmental outcomes alongside cost. That change has opened the door to a more strategic use of public purchasing, but it has not yet guaranteed that departments use it consistently or well.
The cross-party group on public sector efficiency, chaired by the Labour MP behind the new report, argues that procurement should be treated as a strategic capability of the state rather than a purely administrative task. Its global commission, drawing on experience from 14 countries, proposes a package of reforms designed to make public spending work harder for growth, resilience and regional development. The central argument is that government should stop asking only whether it has secured a low price and start asking what the money creates.
One of the report’s main proposals is a Public Growth Test for strategically significant contracts worth more than £2 million. Before a contract is awarded, departments would be required to set measurable economic, social and strategic objectives. A companion Public Growth Account would then track what major programmes actually deliver. The aim is to close the gap between promised benefits and real-world results, particularly where contracts are said to support jobs, skills, innovation or local supply chains but those outcomes are rarely monitored with rigour.
The report also argues that government should use its purchasing power to shape markets more deliberately. It suggests identifying a small number of national strategic markets aligned with the Industrial Strategy and backing them with a five-year demand signal. The logic is that firms are more likely to invest in training, production capacity and innovation when they can see a stable pipeline of state demand. Supporters of the approach point to international examples. Canada’s Industrial and Technological Benefits policy is estimated to support 40,400 jobs and more than C$5 billion in GDP each year, while France and South Korea are said to give suppliers clearer visibility of future public demand.
This is not just about efficiency in the narrow sense. Local government procurement data shows how volatile public purchasing can be, with contract awards rising and falling sharply from quarter to quarter. In the final three months of 2023, local authorities awarded £4.2 billion in contracts across almost 5,000 deals, less than half the value of the previous quarter. In the third quarter of that year, awards totalled £8 billion across more than 6,000 contracts, a 67% increase. Such fluctuations can make it difficult for suppliers, especially smaller firms, to plan, hire and invest. A more predictable approach to procurement could help stabilise the market.
Social value commitments are another area where the gap between aspiration and delivery can be wide. Suppliers often promise apprenticeships, local jobs and more business for small and medium-sized firms at tender stage, but those pledges can fade once contracts are signed. The commission’s answer is a national Social Value Delivery Standard, backed by enforceable penalties for serious underperformance and public reporting on supplier results. Of the 14 countries studied, none appears to publish a comparable supplier performance record, which suggests the UK could set a useful international precedent if it chose to.
The report also reflects a more sober understanding of supply chains after the disruption of the pandemic and the geopolitical shocks of recent years. Procurement models built for a relatively stable era now look less fit for purpose. Critical supply chains, the commission argues, should be treated as a national security issue. It recommends a National Supply Chain Security Centre to gather intelligence on key suppliers, alongside a National Criticality and Resilience Test for strategic contracts. Buyers would have to ask what would happen if a supply chain failed and how quickly it could be replaced. That disruption cost, the report says, should be factored into value-for-money assessments rather than ignored in favour of the lowest upfront price.
Better data sits at the heart of all this. According to the commission, commercial information across government remains fragmented, making it harder to spot risks, compare performance or identify opportunities early. It proposes a Government Commercial Intelligence Platform based on common standards and supplier identifiers. Where artificial intelligence can demonstrably improve productivity, the report says, the gains should be reinvested into higher-value commercial work rather than simply booked as savings.
There is also an international dimension. The commission says other governments continue to look to the UK for commercial leadership, suggesting that Britain’s expertise still carries weight beyond its borders. On that basis, it argues for UK-led international buying clubs and shared commercial standards that would strengthen collective bargaining power and influence the rules faced by global suppliers. That is a reminder that procurement is not only a domestic management issue but also a source of diplomatic and industrial leverage.
Crucially, the report does not call for a wholesale rebuild of the system. Instead, it recommends a phased programme: put in place ownership, standards and data foundations first; trial the reforms in selected markets; then roll out what proves effective across government. Each proposal should have a named lead, a timetable and clear measures of success focused on outcomes rather than activity. That kind of sequencing may be essential if procurement reform is to survive contact with a Whitehall culture that often prefers process to judgement.
The timing is notable. With the Budget approaching, pressure is growing on ministers to show that existing spending can deliver more. In that context, procurement may prove to be one of the most important levers available. If government can use its buying power to support growth, resilience and better public services, the benefits could reach far beyond the contracts themselves.
Source: Noah Wire Services
