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The case for maximising the impact of the Welsh public pound

March 9th 2021

Public spending is one tool among many to help deliver social outcomes. Helen Cunningham sets out where and how  its impact can be maximised

The publication this week of the Welsh Government’s updated Wales Procurement Policy Statement (WPPS) re-affirms its emphasis on procurement as a means to deliver socially responsible outcomes. Procurement has become an area of increased interest in this regard and has been the subject of committee inquiries and features prominently in proposals for social partnership legislation.

In our Transforming Wales: Building a better economy paper ahead of the Senedd elections, we set out actions for a fairer, more resilient economy, including maximising the Welsh public pound using existing levers. Public procurement is one such lever, and its power varies depending on which areas of the economy it does or does not operate. For example, there are some sectors – such as wholesale and retail, food and accommodation services – where it has very limited reach.  Procurement spending on specialist goods and services and staff costs doesn’t have the same leverage as other procurement spending, but where it does have power and reach, there is every reason to maximise it.

Made in Wales

That’s why we advocate a “made in Wales programme” which would help supply essential needs through and beyond procurement. While vulnerabilities in supply of essential goods and services were highlighted by the pandemic and Brexit, securing essential goods via a procurement environment that for example includes incentivising production and re-shoring – has received little attention. Maximising the Welsh public pound in this respect goes beyond procurement. By increasing the proportion of goods and services made in Wales – whether publicly procured or purchased by consumers- it could both increase the security of supply as well as stimulating the economy and labour market at a time when such a stimulus is much needed. It can also help respond to climate change in lowering the Welsh carbon footprint of the goods and services we use. A Made in Wales programme would require a comprehensive understanding of the risks and opportunities of the supply of essential goods as well as supporting to increase in capacity to do so.  Development of a Welsh State Aid strategy in line with a post-Brexit subsidy control regime could also help re-dress the historic underuse of state aid as a tool to support specific sectors, places and workers in Wales.

Responsible business

The Welsh public pound has reach into other areas through grants, loans and allowances. The Welsh Government has signalled its intention to strengthen the economic contract; based on a “something for something” approach. We advocate extending the requirement for responsible business behaviour to all beneficiaries of public funds, applying the same expectations to all funding streams.  It would help send a clear message to businesses and simplify compliance, and help use the public pound to embed responsible business behaviours to an even greater extent across the Welsh economy. Achieving it would be supported with an effective compliance regime to ensure requirements are fulfilled throughout and down the supply chain. It would also support businesses to be “contract or grant ready” so that best practice becomes a business norm and would include detailed advice and guidance, and the provision of peer-to-peer support.

Making the most of the Welsh public pound by understanding where it reaches and taking action to secure essential supplies, promote responsible business and provide an economic stimulus can ensure the next Welsh Government gets the maximum bang for its buck across public expenditure.

Helen Cunningham is policy and research officer and leads our work on economic resilience. Follow her on twitter at @cunninghamhel

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