The British government’s push to “buy British” is facing a fundamental challenge: British companies are often unwilling to bid for public contracts. This creates a disconnect between the state’s procurement goals and the private sector’s willingness to engage.
Politicians from across the spectrum, including figures like Andy Burnham and Robert Jenrick, have called for more of the UK’s £395 billion in public spending to be directed toward domestic firms. The idea is to boost the domestic economy and supply chains. This echoes a historical moment when, in January 1968, five typists in Surbiton offered to work an extra half hour a day, unpaid, to help the economy. Their small act sparked a national campaign.
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However, a significant number of British businesses are not participating in the tender process for government work. Studies show that for about 20 per cent of public tenders, only one supplier submits a bid. This lack of competition suggests a deeper problem than a lack of patriotic enthusiasm among companies.
The issue lies in the structure and rules of public procurement. The system is often seen as unwelcoming, especially for innovative startups. Government procurement rules favor purchasing goods and services that have been specified in detail over many months. This approach, compared to Henry Ford’s idea of giving people cars instead of “faster horses,” stifles new ideas and products that do not fit pre-existing requirements.
While the government attempts to reserve contract value for small and medium-sized enterprises (SMEs), this support often fails to reach the most ambitious startups. Once a company grows beyond the SME definition, that financial support disappears. Furthermore, even companies that win contracts face high costs. The bidding process requires commitments to complex ‘social value’ measures, which can include decarbonization, office relocation, and creating apprenticeships. These onerous requirements can deter participation. The chorus of the 1968 single “I’m Backing Britain” captured a national mood with the line, “The feeling is growing, so let’s keep it going, the good times are blowing our way.” Few businesses would feel that way today.
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The government cannot be surprised by the low number of bidders when the procurement process is so difficult to handle. The solution is not to mandate that companies bid, but to make it easier for them to sell to the state.
A group of experts at the Re:State think tank, where Joe Hill serves as policy director, has drafted new statutory guidance aimed at fixing these problems. The proposal suggests that the government could implement these changes to make public procurement more accessible and attractive to British businesses. The government sets the rules for the parts of the economy it buys from. If those rules are reformed, more companies might be willing to participate.