Research Output

Public procurement and regional development: the impact of local authority expenditure on local economies.

  Spatial patterns of public expenditure and government procurement have a significant impact
on economic and social development in localities and regions across the EU. In the UK,
there has been particular attention given to variations in government spending across regions
and the effects of competitive tendering processes and EU State Aid rules on regional
economies (Bennet 2006; Pinch and Patterson, 2000). Reimer (1999) has charted the
regional consequences of widespread contracting out of local government services to large
national private firms during the 1980s and 1990s driven largely by the need for greater
efficiency and “value for money”. More recent government policies affecting procurement
practices appear to have intensified these processes. In a recent document entitled
“Transforming Government Procurement” (2007), the UK Government restated its objective
to improve value for money in public procurement. Reference is also made in this document,
however, to the principle of “sustainable” procurement that requires consideration of the
impact of procurement decisions on government targets for the environment including carbon
emissions, levels of waste, water consumption and energy efficiency. These aspects add
considerable complexity to decision-making in the procurement process and may have
intended (and unintended) consequences for local and regional economies.
Interventions designed to balance the need for greater efficiency in procurement with
sustainability criteria will inevitably have further impacts upon spatial patterns of public
procurement and may also alter long-standing relationships between local authorities and
small and medium-sized businesses in their territories that depend on public contracts for
their survival. This paper presents the findings of research carried out on behalf of the
Cumbria Procurement Initiative (CPI) in the North West Region of England. The study
analyses the collective patterns of spend of eight Cumbrian Local Authorities (County Council
and Cumbria Constabulary, six Districts and the Lake District National Park). Data is
presented on variation in spending patterns by type of purchase, size of contract and
geographical location. The characteristics of the supply base are investigated further using a
two stage survey of businesses (postal questionnaire with selected interview follow-up).
Results of the survey are used to show the characteristics of suppliers and their level of
dependency on local authority contracts. Managers’ evaluation of the advantages and
disadvantages of contracting with the public sector are also presented. The paper concludes
by considering the implications of the findings for procurement and the extent to which local
authorities have retained a capacity to act to support local economic development.

  • Date:

    30 November 2007

  • Publication Status:

    Published

  • Library of Congress:

    HJ Public Finance

  • Dewey Decimal Classification:

    336 Public finance

Citation

Peck, F. & Cabras, I. (2007). Public procurement and regional development: the impact of local authority expenditure on local economies.

Keywords

Public procurement; local authority; regional economics; rural development; local communities;

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