Procurement and local protectionism - how 'progressive' procurement will make communities poorer

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Writing in New Start (the house journal of the Centre for Local Economic Studies, CLES) Matthew Jackson, the Centre's associate director sets out his argument for using local government procurement to do something other than securing the best price and quality for the goods or services procured. Matthew wants local protectionism:

For me, there is too much about using local government procurement to achieve efficiencies and to mitigate the impact of the cuts as opposed to advocating a progressive new future around local government procurement being used for local economic and social benefit.

This is, essentially, consultant-speak speak for finding ways round the strictures placed on procurement by the EU and Westminster governments. Rather than the commissioning and procurement process being about securing efficient and effective public services, Matthew wants to stretch its purpose to encompass the usual litany of 'progressive' politics:

Procurement should not be a narrow corporate function restricted to local government, nor is localism its primary concern. It sits at the heart of what we want and need from our public services in the future.  Of course it needs to focus on efficiencies, but effectiveness in supporting growth, addressing poverty and inequality and creating great places is the real prize.

The problem here is that these things often conflict - so which gets priority.  If using a large multinational guarantees quality and a lower price does that get the nod over the less reliable and higher cost local supplier? Matthew doesn't answer this question except to suggest that somehow we rig the procurement process.

There should therefore be a defined understanding of the key considerations of what an effective purchase is, regardless of whether it is being undertaken by central government, local government, an NHS Trust or a private business. Of course cost should be a key factor, but so should providing a great future role for our public services, as well as fairness, equality, and the opportunity to create local employment and develop local businesses.

Sadly these weasel words will infect local government leaderships, they'll cluck around the wise words of Matthew and his ilk and they'll fail to realise that the losers in all this are the very local people CLES claim their protectionist model will help.

The only way in which the model can work is for procurement costs to be higher than they would be in a system driven by seeking to maximise efficiency. And that means one of two things - either fewer services delivered to local people because more money has gone on procuring those services than was needed. Or higher taxes meaning that local people have less money to spend.

All this talk of 'fairness' and 'social benefit' coming from local protection is, quite simply, a deception typical of 'progressive' policy-making. The real result is worse government, fewer services and higher taxes.

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Today's load of old nonsense...

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...courtesy of the Centre for Local Economic Studies & New Start:

We’re in a systemic crisis of human and environmental capital. This is the moment that things are going to get re-organised and radically transformed. Our generation will see the biggest transformation since the corporate firm was born 200 years ago. We will see that same magnitude of change as we fundamentally shift how we, as humans, organise ourselves. This transformation will take place whether we like it or not, the economic conditions are there. We’re going to need to rebuild most of the institutional infrastructure of the UK. Some of it because there’s no other viable way of keeping it going, while other institutional infrastructure – like education – is being actively challenged by changes in business model, by value extractable. We’re in a remarkable place that’s changing the nature of being, of who you are and how you have to behave. Whether you call it the Big Society or the Good Society, the idea that civic society is going to become more self-organising will happen. We’re on the verge of new tipping point around that. Whether it’s about setting up a co-op to buy energy that creates a whole new market relationship with providers or about DIY-producing our own furniture, this is the new behaviour of society and it will fundamentally change the nature of production, the relationship between consumers and producers, and the nature of investments. We are in a great restructuring, a great transformation. Technology, culture and human consciousness – how we exist in the world – are changing.

I'm not even going to try to get underneath what this is all about - every trendy community, greenie, social enterprise cliché is crammed into a hundred words of so. Let me just pick out one sentence of astonishing wiffle:

We’re in a remarkable place that’s changing the nature of being, of who you are and how you have to behave.

Now please tell me that I'm going to grow long har, wear a kaftan, live in a yurt and listen to the Grateful Dead? This sort of hippy nonsense went out with that generation I thought! The capacity to string senseless platitudes together to make a pleasing sound was fine when it was just a few teenagers sitting in muddy fields but when a 'repsected' academic body - a veritable think-tank promotes it, I start to wonder.

This 'fundamental shift', the re-organisation and 'radical transformation' - all just meaningless mumbo-jumbo designed to impress the gullible. The 'speaker', one Indy Johar, provides not substantiation for his trendy polemic, there is not challenge, just the spouting of what might be described (and was by my wife) and "the words of a naive but articulate 15-year-old.

CLES really should do better.

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All very pretty, such a lovely graph - but where's the evidence?

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The Centre of Local Economic Studies (CLES) does itself no favours when it allow comment on economics - complete with graphs and snide remarks about Ronald Reagan - that have no evidential support.

This piece on "Voodoo Economic Development" sets out its left-wing stall early on:

Simple Reaganomics was focused on a ‘having your cake and eating it logic’, which was brilliant in its simplicity, namely that a lowering of taxes would improve the economy and lead to more tax revenues. 

Now there is evidence for that - indeed the article refers to the Laffer Curve. And there may be evidence to support the article's contention that:

...in many places we still need significant and hefty interventions.

It's just that the author - one Neil McInroy - fails to present us with any of that evidence. And its accompanying graph appears to be merely a pretty representation of the writers opinion rather than something with an evidence base. All we have is fine - slightly lefty - words.

Yet this author gets before parliamentary committees, gets high profile places in national publications and leads a significant think-tank. And is unable to provide any link to the evidence supporting his argument for more of the same in regeneration.

Awful.

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Er...no. Competitive markets do not come from government managing those markets.

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History tells us that in this country we tend to opt for a form of ‘pro-competitive disengagement’, removing those barriers and letting ‘market forces’ dictate. Instead, we should introduce a set of policy instruments that can both facilitate the provision of the services our communities really need, and contribute to the health of our local economies.

Apparently.

The author also believes that:

...we see policy initiatives that will disincentivise these types of organisations from entering the market. Payment by results and outcome based commissioning are examples.

Clearly this bloke has little substantive grasp of how business works - you do something for me and I pay you.  In the private sector it's all payment by results you know! But no, our friend believes that markets must be managed:

If public sector reform is to produce stable and genuinely competitive markets for local public services, such that result in quality public services, the government must create and implement an industrial policy for the sector. Such a policy would enable central and local government to make strategic interventions to manage markets, the demand and supply side, rather than simply removing barriers to entry.

So "genuinely competitive markets" come about because of government intervention? What nonsense!

And these people are not only given space at CLES but are paid to advise local councils - save us!

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