‘Good growth in every postcode’ is a woeful catchphrase
Burnham and co’s bid to ‘back British’ and generate ‘good growth’ everywhere is a bid to fool voters with their own money, writes Eliot Wilson
Last week, Louise Haigh, first secretary of state, Andy Burnham’s consigliere and viceroy in northern England, announced a shakeup of the government’s rules on public procurement. This sounds dry but represents £90bn of public expenditure each year. It matters.
Government purchasing is overseen centrally by the commercial policy directorate of the Cabinet Office, and Haigh is the most senior of eight ministers. It operates under the terms of the Procurement Act 2023: this currently requires contracts to be awarded with “regard” to value for money, public benefit, integrity, the barriers facing small and medium-sized enterprises, contribution to the UK economy, various elements of “social value” and a host of other considerations.
The process is too complex, too slow and too muddled. Haigh was right to say last week that “if you prioritise everything, then you’re prioritising nothing”. Have we finally found a minister who understands what “prioritise” and “priority” actually mean?
Not too fast…
Haigh announced that the requirements and conditions surrounding public procurement will be radically pared back. They will focus “ruthlessly” on how contracts, with foreign or domestic suppliers, create jobs, skills and opportunities in Britain. Current social value criteria account for 10 per cent of the scoring when contracts are assessed, while the new social-value-on-Ozempic requirements will make up 20 per cent.
John Healey, the new Chancellor of the Exchequer, was essentially in a political call-and-response performance with Haigh.
“We have made it a leading priority to back British, not just if possible but by design, so that procurement supports British jobs, British apprenticeships and British innovation. This is an active, hands-on government determined to support British businesses.”
The government’s new policy is a good example of superficial logic. It starts from an inherently absurd premise founded on a soundbite which the Prime Minister has clasped to his bosom: the new approach will promote “good growth in every postcode”. As a semi-alliterative catchphrase, it is not utterly woeful, but a moment’s examination robs it of any plausible meaning.
What is “good growth”? Or perhaps it would be more revealing of the true prejudices underpinning “Burnhamism” to ask “what is bad growth?”. Until the government is open and specific, “good” growth cannot be measured, so we cannot tell whether we are achieving it.
What does “in every postcode” mean? There are about 3,000 postal districts in the UK, represented by the first half of the postcode, like SW1 or SE6. These are sub-divisions of 121 postal areas, the initial letter, like G (Glasgow) or WN (Wigan). The Prime Minister wants every one of these to achieve the mysterious “good growth”. That suggests a nationwide uniform improvement in economic performance. Has any country ever achieved such evenly distributed growth?
So the fundamental goal of this refinement of public procurement is a logical nonsense, a flimsy piece of rhetoric.
‘Back British’ misses the point
Healey has said that contracts must be awarded with “back British” as the priority “by design”. That means by definition that all other criteria must be subordinated to it. Following the logic, this indicates that tenders which do not offer best value for money may well be accepted because they make a larger or more immediate contribution to the UK economy.
You can see why Haigh and Healey buried that particular lede. “Value for money no longer our primary concern when spending taxpayers’ money, says government” is not an ideal headline from a comms perspective.
Ministers do not want to admit the plain truth. In current Whitehall-speak, departments will be expected to maximise the use of public procurement as a strategic lever to deliver innovation and growth in every postcode”. In simpler terms, the government will use public expenditure to support British industries whether or not they offer the best value for money or provide the best products or services. What will matter is that they are British.
This is a feasible approach to expenditure, and has been adopted before. But it rarely ends well, because public money often ends up protecting outdated or inefficient companies from the scouring competition of the free market. It is impossible that British goods and services will always be the best in every sector. Ministers should be honest and say they will accept second-rate products so long as they bear a Union flag.
It is ironic that one of the champions of this new nativist approach is John Healey, because a former defence secretary should be more alive than anyone to the potential pitfalls. In the 1950s and 1960s, Britain’s strategic nuclear capability was provided by the RAF’s V bombers, three different aircraft all performing the same role. Each was built by a different manufacturer – the Vickers Valiant, the Avro Vulcan and the Handley Page Victor – so the procurement supported more of the aviation industry.
It did not work. Vickers was merged into the British Aircraft Corporation in 1960, Avro was swallowed up by Hawker Siddeley Aviation in 1963 and Handley Page went into liquidation in 1970. In 1977, virtually the whole sector was nationalised as British Aerospace.
Like Starmer’s administration before it, the Burnham government sees policies which can work in some limited circumstances then applies them as general principles. There will be times when British firms can be favoured for procurement, especially in terms of maintaining sovereign manufacturing or other capacities.
But if you regard the first duty of public procurement as supporting British enterprise, you will find yourself propping up uncompetitive businesses or trying to create sustainable businesses where they cannot survive without subsidies. In 1968, the Labour government spent the equivalent of more than £300m setting up International Computers Limited in order to foster a British computer industry to compete with the likes of IBM. History shows how well that dirigiste daydream worked.
There is a famous story of Milton Friedman on a visit to China, seeing thousands of labourers digging a canal with shovels and asking his official minder why they were not using modern mechanical equipment.
“You don’t understand,” the CCP functionary replied. “This is a jobs programme.”
“Oh, I thought you were trying to build a canal,” Friedman said. “If it’s jobs you want, you should give these workers spoons, not shovels.”
Our current government seems to have drawn exactly the wrong lesson from that, and is buying more spoons.
Eliot Wilson is a writer and historian. He is a senior fellow for national security at the Coalition for Global Prosperity and a contributing editor at Defence on the Brink