Level the playing field for small businesses to win public sector work

As a country we spend £268bn a year buying goods and services from the private sector. Small local businesses are frozen out of this process because of the way procurement tenders work. We can break contracts down into smaller parcels, so small firms can bid for them. Often tenders go to huge corporations like Carillion or Interserve who fail to deliver, and need bailing out by the government. Worst of all, their profit comes from driving down pay and conditions of the workers who deliver them, and they take this money out of our region.

I’ll create a Procurement Framework to level the playing field for local businesses, and keep those profits here. We will use legal powers in the Social Value Act to prioritise firms who pay the Real Living Wage, train local workers, have secure employment practices (no zero-hours contracts) and sustainable transport plans. And we can address the scandal of small firms not getting paid on time by rewarding points for firms who maintain high ethical trading standards.

As Mayor I’ll encourage local public services such as councils, hospitals and universities, to join this framework, and encourage large private sector firms to join up too. We will build on the pioneering approach of Preston and other councils in working with employers to ensure they prioritise local small businesses and local employment when buying their supplies and services. Rather than spend the region’s money with large corporations headquartered outside of the region, we can create local contracts and see money spent locally.

For every pound spent with a small or medium sized business, 63p is re-spent in the region, this drops to 40p for every pound given to a large or multinational company. And corporations are less likely to pay a fair amount of tax. In Preston in 2013, 5% of the public procurement budget money spent by the council, was spent in the city. By 2018 this had risen to 18% of the budget. Preston has returned over £275m to the local economy and seen unemployment fall from 6.5% in 2014 to 3.5% today. PricewaterhouseCoopers called Preston the ‘UK’s most improved urban area’.

Only 22% of central government expenditure is with SMEs, and the Procurement Framework will help local firms win work from central government, by helping them through the tendering process.