The state wants to ‘buy British’. But the British don’t want to work with the state
The government’s drive to ‘buy British’ is futile if British companies don’t want to sell to them, writes Joe Hill
In January 1968, five typists in Surbiton offered to work an extra half hour a day, unpaid, to help the economy. Within weeks “I’m Backing Britain” was a national campaign, complete with an endorsement from the Prime Minister, Union Jack logos everywhere and a theme song with the same name sung by Bruce Forsyth. It had fizzled out by the summer, in part because of attempts by Robert Maxwell to convert the campaign to “Buy British”, only for it to be undermined by the news that the campaign T-shirts were all made in Portugal.
Every party now wants us to back Britain again, and they want us to start with “buying British” – everyone from Andy Burnham to his Chancellor John Healey to Reform UK’s Robert Jenrick has called for it. Like many of their predecessors, this generation of politicians wants to direct more of the UK’s £395bn of public procurement spending to British companies.
Why British companies aren’t bidding for government contracts
Buying from the private sector is a huge part of what the state does. Without the private sector, the public sector would grind to a halt – no arms for the armed forces, no medicine for the NHS, no school buildings for the education system and no cars for the police. It’s understandable that the public want those things to be bought in Britain, but mandates aren’t the answer. To avoid buying any more T-shirts from Portugal, the government needs to work out why British businesses can’t compete in the first place.
The much bigger problem is that too few companies in Britain want to bid for the public contracts which are waiting for them: one study found that in about 20 per cent of tenders only one supplier even bothered to bid. And who can blame them when we make public procurement so unwelcoming to new companies?
If you’re a startup trying to work with the government, then the chances are you’re trying to sell them something new – a new product or service you’ve invented, and think you could scale into big business. The trouble is that the public sector has made it practically illegal to sell them anything they don’t know they need; the rules pushback against buying anything that hasn’t been through a months-long tender against a highly detailed specification. Henry Ford said that if he had asked people what they had wanted, they would have said “faster horses” rather than cars, and the government is always trying to buy faster horses.
Make it easier to ‘sell British’
The government does try to reserve lots of contract value for small businesses, but most small businesses aren’t innovative and ambitious startups, they’re just small firms that will always be small. And if they do grow out of the definition of a “small and medium-sized enterprise” (SME) that money dries up. And for any companies that do successfully get into the government sector, the costs of doing business are far too high. Government assesses bids for contracts not just based on price and quality, but also on getting companies to commit to onerous ‘social value’ measures, including everything from decarbonisation to relocating their offices and creating new apprenticeships. So why bother?
Our leaders shouldn’t be surprised when British companies don’t line up to bid, whatever they say about ‘buying British’. They should make it easier to sell to the British state. Handily, my colleagues and I at the think tank Re:State have published a new draft of the statutory guidance which can fix these problems all in one go – the PM could implement it tomorrow.
“The feeling is growing, so let’s keep it going, the good times are blowing our way” went the chorus of the 1968 single “I’m Backing Britain”. Few businesses would feel that way today. The government doesn’t get to set the rules for the whole economy, but it does for the bits it buys from. If it gets this right, that feeling just might grow again.
Joe Hill is policy director at Re:State think tank