Net zero and DEI targets cut from procurement rules as firms pressed to raise pay and hire NEETs
Net zero, modern slavery and equality rules are set to be stripped from procurement rules as Andy Burnham’s premiership looks to force firms to prioritise job creation.
Several major tenders for government contracts feature a list of “conditions of participation” that require firms to report on net zero, diversity, ESG –environmental, social, and governance for long – and modern slavery, plus a number of other issues.
But regulations around government procurement are set to be cut, Burnham’s chief government enforcer Louise Haigh has said, as the focus will turn to job creation and training.
Haigh, who is the chancellor of the Duchy of Lancaster, the ministerial role which looks after Whitehall operations, said the government would focus public procurement “ruthlessly” on job creation.
“For too long, [public] procurement has tried to tick too many boxes,” she told the Financial Times.
“If you prioritise everything, then you’re prioritising nothing.”
‘Woke’ net zero rules to end
Shortly after the interview, the Cabinet Office announced that the government wanted “every pound on public procurement to support British businesses, boost growth and help build a fairer economy”.
It said the new provisions would start from 2027.
Firms that offer workers pay packages above the national minimum wage will also be rewarded, Morning Wire can reveal. Bosses who retain staff, boost pay for staff over time and provide improved workers’ rights will also be more likely to win contracts.
Authorities will also be required to consider whether firms provide work experience opportunities in deprived areas and how skill shortages are addressed through training.
Criteria relating to net zero and a host of other social factors account for around 10 per cent of the score given to bids for government contracts, although a new criteria focused on job creation will have a greater weighting of 20 per cent on larger bids above £5m.
Haigh said: “There were things that I think a lot of businesses would have struggled to prove, like tackling domestic abuse and improving high streets. It became quite amorphous.”
Only bidders for contracts above £1m will be required to prove that jobs will be created and local economies can improve.
Earlier this year, the Bank of England’s tender for banknote suppliers was labelled “woke” as a pass-or-fail regime forced manufacturers to comply with ESG and diversity standards.
Shadow business secretary Andrew Griffith criticised procurement rules for failing to help the financial sector, particularly given low growth in the UK economy.
Joe Hill, director of strategy at the Whitehall-focused think tank Re:State, said a move to strip pack rules was “big” and would “end Everythingism in procurement”.
He said current rules around net zero or modern slavery risked pricing out smaller firms who struggled to compete with larger companies on tight regulation, yet he added that putting a greater emphasis on new social value criteria would increase the cost of contracts.