Dismissive Labour

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I was more than a little disappointed with the Welsh government’s response to a question from Leanne Wood on procurement last week.  The question highlighted how much more successful some other EU countries are at ensuring their public procurement is 'internal' rather than 'external'.

That doesn’t mean that I was entirely convinced about all aspects of the question.  Whilst I have no reason to doubt the accuracy of the figures quoted (Germany 98.9%, France 98.5%, the UK 97%), the precise figures may not be particularly helpful.  I doubt that they tell us much more than that a larger country with a bigger population and a more diverse economy will be able to meet more of its needs internally than a small country.  And I wouldn’t be at all surprised if a breakdown of the German figures, for instance, by region and municipality showed an increasing level of external spend.

But it’s the principle rather than the detail which is important.  Every pound spent by Welsh public authorities outside Wales is a pound lost to the Welsh economy.  It represents a loss of GDP and wealth – it’s like passing that pound note out through the window.

Leanne is surely right to draw attention to that as an issue, and increasing local procurement is something within Welsh control which can help to boost our economy.  Local procurement also has environmental advantages, of course.

The Welsh government response was to say that setting a precise target for internal procurement would be against EU law.  Well yes, I’m sure they’re right – but is that really an answer to the question, or just the politicians' way of avoiding the issue?

Successive Welsh governments – involving three of Wales' four parties – have regularly talked about improving local procurement, but it’s been mostly talk with little action.  And whilst the Minister in one department talks about local procurement, his or her colleague in another has been busy pushing Welsh public authorities into bigger and more collaborative procurement arrangements which may well save money but would also make it harder for small local companies to compete.  Holding seminars to help those smaller companies to understand large and complex procurement exercises is a bit like trying to hold back the tide.  Like Canute, they merely demonstrate how ineffective the approach is.

There are things that the Welsh government could do, and it would have been better had their response demonstrated some understanding of that, and some willingness to act rather than an airy dismissiveness.

The first thing they could do is to simply stop doing those things which make it harder for local companies to supply goods and services.  Cheapest isn’t always best.

The second would be to look at what is being procured from outside Wales and ask why we can’t supply that internally.  There will always be some things that we can’t provide internally, but there are many which we can.  And targeting economic development resources at encouraging the production of goods and services for which we have a home market is probably going to give us a more sustainable economy for the long term than concentrating on activities which depend on producing and selling goods and services for which there is no – or only a very small – home market.

I was left with the impression that dismissing any suggestion from an opposition party was seen as more important than doing something positive.

Over-riding local views

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One of the cornerstones of my own political outlook is the idea that democracy should be both as local as possible and as participatory as possible.  But one of the big stumbling blocks is “what happens if, or rather when, local people take the ‘wrong’ decision?”.  It’s when nice idealistic theory meets hard practical reality.

The UK Government has got itself into a bit of a corner on the question this week, over the establishment of a site to bury low level radioactive waste.  What makes it harder for them is that the minister who’s taken the decision is the same Communities Minister who’s trumpeting localism as a principle, and piloting the Localism Bill through parliament.

Unfortunately for the government, albeit entirely predictably, the people living in the area of the proposed tip don’t want it.  In a local referendum, 98% of them voted against it; and the local county council voted unanimously against it as well.  I suspect that most, if not all, local communities would react in similar fashion to such a proposal.

The government have, of course, relied on ‘expert advice’ that the site will not be ‘harmful’ in coming to their decision to ignore local opinion.  Well, yes; but the experts aren’t necessarily local, and decision-making on the basis of expert advice isn’t the same thing as empowering local communities.  Nor is ‘expert advice’ in itself sufficient reason to disregard local opinion.

It’s not a situation which is unique to the question of nuclear waste.  There are parallels with the protest earlier this week outside the National Assembly against the infrastructure which will be needed to transmit power from mid-Wales windfarms to the National Grid.  In both cases, the government is trying to implement a cohesive overall policy, whereas local opinion is opposed to the impact on themselves.

By stretching the point just a little, we could also draw a parallel with some EU decisions, where ‘local’ opinion – even if ‘local’ means the UK – sometimes opposes those decisions.

In every case, the larger body, I am sure, would argue that it is acting for the greater good of the whole.

In the specific, it’s clear that nuclear waste has to be disposed of somewhere, and ultimately it is the responsibility of government to identify where.  But they shouldn’t expect the waste to be welcomed with open arms, wherever they decide to put it.

The underlying quandary is one with which I’ve long struggled.  How local is local, and how much decision-making should be local?  And, for those of us who believe that power is not something which comes from the centre and can be passed down, but something which belongs to the people in the first place, on what grounds should other people ever over-ride local wishes?

The legalistic answer would be that parliament has determined which powers reside where, and parliament has given the minister the right to over-ride local opinion in this case.  My problem with that is that parliament’s right to decide is predicated on the assumption that the power belongs to parliament (on behalf of the sovereign, naturally) in the first place.

Some suggest a ‘financial’ answer, based around an input of cash into the local community from either the government or the developers so that they see some direct benefit from accepting an unwelcome proposal.  Others see that as a form of bribery.

A more honest answer is that communities sometimes have to pay a price for belonging to a greater whole; membership of a wider community has both benefits and costs.  Building a more localised society and maintaining the consent of the governed requires rather more work in spelling out that balance, and that communities accept it.  What governments generally do in practice, though, is to simply carry on regardless.

If it is to be more than a mere slogan, building a more localised and empowered network of communities requires a complete change of approach, which seeks the active participation and support of local communities rather than just using raw power.  It depends on a more informed populace as well. 

It’s about more than simply persuasion; it’s a different paradigm.  Believing that it can be achieved by passing legislation or offering cash rewards simply shows how little some politicians really understand the issue.

Visions and diatribes

Tweet Sadly, Peter Hain's essay on the economy yesterday read more like a pro-Labour and anti-Tory diatribe than a serious contribution to discussion of the way forward for the Welsh economy.

His assertion that he is determined to progress the Cardiff-Weston barrage will only add to the concerns of those who believe that the decision has already been taken on largely political grounds, and the feasibility study looking at the environmental impact of this and other schemes is mere window-dressing.

The commitment to the South Wales LCEA is encouraging, certainly, as are the jobs being created in Chepstow and Ynys Môn.

My biggest concern with what there was of an economic vision, however, is whether government - at all levels - is really managing to struggle free from the idea that the way forward for Wales is to compete in global markets and start looking instead at a re-localisation of the economy. I detected no sign of that, just a continued concentration on large schemes and competitiveness.

Efficiency savings and job cuts

Tweet It's hard to disagree with the notion that organisations, including public ones, should do things in the most efficient way possible. So the phrase 'efficiency savings' has a nice friendly ring to it; much nicer than the idea of 'cuts'. In practice, however, they frequently amount to the same thing - the way the government achieves its 'efficiency savings' is simply to cut budgets and tell the budget holders to find a way of managing on less money. Whether they do so by actually achieving the same outcomes for less money, or by changing the outcomes, is entirely down to what they can actually (as opposed to theoretically) achieve.

One of the major elements of the government's proposed efficiency savings in this week's budget is something called 'extended collaborative procurement'. A lovely piece of jargon; but what I think it means is that if public bodies work together to buy their goods and services, they can purchase those goods and services in fewer, bigger, contracts, and they can manage both the procurement process and the implementation of the contract with fewer staff, as well as getting lower prices by buying in bulk.

Simple, and effective; and clearly a genuine efficiency saving. But it isn't the whole story, because there are other consequences of this.

The most obvious is that bigger contracts are more likely to go to bigger companies – and bigger companies are likely to be less local – so money flows out of local economies into the 'headquarters' of the organisations concerned. The jobs in those headquarters are often better paid than the jobs of the operatives delivering the goods or providing the services. And that differential in salaries is one of the reasons why those places which serve as headquarters for large companies tend to have higher GVA per head than those areas which only have the staff delivering the goods or providing the services.

I'm aware of two instances recently where companies headquartered in Carmarthen have lost out in bidding for contracts to the public sector, to be replaced by larger companies headquartered outside the county. I don't doubt that proper procurement processes were followed, and that the public authorities concerned have duly made their 'efficiency savings' by awarding the contracts in the way that they have. But is the decision 'right' in overall terms for the local economy?

There are times when, for a slightly higher cost, and by awarding a larger number of smaller contracts, public bodies can keep more of the money and jobs locally, and the overall effect on local GVA per head will be more positive – and I'm utterly convinced that too many public authorities are looking only at the short term cash savings which can be achieved, rather than at the greater picture.

It's not helped by government – including in this case, the Assembly Government. Whilst the left hand of the Assembly Government (Economic Department) has talked a great deal recently, as a result of the economic summits, of encouraging public authorities to 'buy local' (quite rightly), the right hand (Local Government Department) seems still to be encouraging local authorities to join bigger and bigger purchasing consortia to achieve more and more 'efficiency savings'. They can't both be right – and it isn't what I would call 'joined-up' government.