Every year around one-third of all Government spending goes on public contracts to the private sector. Before Covid, this sum was in the region of £290 billion per year – more than twice the total annual NHS budget, five times the defence budget, and more than the entire welfare system.
Before Brexit, the way in which this extraordinary sum was spent was to a large extent determined not by government policy but by EU law. This meant that in many cases contracts were awarded based on the bottom line rather than the common good or the potential to create jobs. The controversies over sourcing PPE during the Covid pandemic have shown the importance of spending these billions of pounds of taxpayers’ money in the best way possible.
Now Britain is outside the restrictive EU rulebook, there is an opportunity for change. The CSJ calls upon the Government to use its huge purchasing power to direct these existing funds to the areas that need it most by adopting a Levelling Up Test for all central government contracts: Whitehall should explicitly prioritise areas of high deprivation or high unemployment within its new post-Brexit procurement rules. Central government contracts should also, where possible, be devolved to local authorities that are in most need of more investment.
The UK has been described by economists as one of the “most regionally unbalanced countries in the industrialised world”. The scale of this regional inequality has led this government – rightly – to adopt its levelling-up agenda. Whitehall has one enormous, direct financial lever at its fingertips with which address this challenge: we should take back control of public contracts to level up Britain.