For the past year, we’ve been working on a report about how local authorities can better use their assets – procurement, property, and pensions – to create more value for local people. In the run-up to launching our research, Senior Researcher Jon Tabbush will be releasing crash courses to these ‘three Ps’.

Procurement 

Councils buy a large amount of goods and services, from construction materials to social care services. In fact, London councils spent £12.9 billion with third parties in 2019/2020. In recent years, many have begun to think about this spending more strategically, exploring whether it could be used to gain more value – whether financial or social – for local residents.  

This can be done in several ways. Recently, lots of councils have begun to attempt to buy more from local suppliers, so that the effect of each pound is ‘multiplied’ by being spent and re-spent in wages and consumer spending. This is often combined with buying from more small- and medium-sized enterprises (SMEs). According to one study, 63 pence per pound, on average, is spent in the local area if local authorities buy from SMEs, while that figure is only 40 pence when spent with larger firms. Councils also often require firms that win their contracts to provide extra ‘social value’, like employing a certain number of local young people as apprentices on a construction job.  

This can have a significant impact on the local economy. A recent study estimated that Preston’s ‘Community Wealth Building’ program, which is focused on local procurement, led to an 11% increase in median wages and a 9% improvement in life satisfaction by comparison to similar areas around the country. These approaches are increasingly being practiced by councils in London. Our analysis found that more than half of local authorities in the city have substantive programs of this kind. 

In our upcoming report, we’ll be exploring London councils’ experiences with progressive procurement and how they can improve their programs, based on in-depth research interviews with four local authorities, focus groups with local residents, and extensive research.  

Jon Tabbush is Senior Researcher at Centre for London. Follow him on Twitter. Read more from him here.