Labour

Buy better and stop selling British business short - Umunna

Chuka Umunna MP, Labour's Shadow Business Secretary, today tells the Government to stop “selling British business short” and make better use of its buying power as the UK’s biggest consumer to boost enterprise and jobs.

Read Labour's Business and Enterprise Working Group interim report in full here.

Speaking in Warwick, at the launch of an interim report from Labour’s Business and Enterprise working group – part of the party’s policy review -  he will call for major changes in Government procurement policies following widespread condemnation over the decision on the Thameslink contract and recent redundancies at BAE systems.

Mr Umunna will cite procurement policy as one of the levers which governments can pull to reward productive businesses and entrepreneurs who are investing for the long term, innovating and training workers, making  and selling real products and services.

Along with tax, regulatory and competition policies, he will say procurement can “set the rules of the game” to support the long-term interests of Britain’s economy and help get people working again now.

The report sets out the challenges facing Britain and explains how active, intelligent government should use all the tools and levers at its disposal to shape the rules of the game so they support long-term business success.

Labour is calling on the Government to use its consumer power to reward companies doing the right thing and help build the new economy we need:

*   Awarding procurement contracts to companies that offer apprenticeships (for contracts above a £1m threshold).

*   Operate within  EU laws that allow the impact on jobs to be part of the contract criteria in some circumstances.

*   Outline a strategy for the future UK train-building industry in the wake of the Bombardier decision – and to make procurement of the new Crossrail rolling stock a part of that.

*   Use its existing procurement budget to expand the value of contracts going to high-growth potential, innovative companies under the Small Business Research Initiative created by the last Labour Government.

Chuka Umunna will say:  

“Using the buying power of procurement can drive thousands of new apprenticeship places, support innovative new business, and unlock markets.

“Instead, the Conservative-led Government is selling business short and selling Britain short. Our economy has now flatlined for a year, well before the eurozone crisis of recent months. David Cameron has shown he is desperately out of touch with the needs of British business and the needs of nearly one million young unemployed people who are crying out for a proper plan for jobs and growth.

“David Cameron’s Government is letting down companies creating jobs in Britain. Through the Thameslink decision, it is jeopardising jobs and investment. And the MoD, under the Conservatives, now buys ‘off the shelf’ from the US with no regard for companies in Britain.

“This Government has abandoned securing apprenticeship places on public contracts. And it is failing to use its position as the UK’s biggest consumer – buying £240 billion a year on goods and services - to make every pound of public money achieve the most public value, driving future growth and jobs, and supporting the British economy we need for the future.”

“The Conservatives are failing to use procurement and all the tools government has at its disposal so we can support business growth to pay our way in the future”

Maria Eagle MP, Labour's Shadow  Transport Secretary, added:

“By refusing to look again at the disastrous decision to build the new Thameslink trains in Germany, the Government has yet again shown how out of touch they are with the need for a coherent strategy for jobs and growth.

“Britain has been building trains for over 100 years. Once this industry is gone, it will be virtually impossible to re-establish and we will fall further behind our competitors. It’s time for ministers to reform the way we procure rolling stock for our rail network and ensure we have a UK based train building industry capable of designing, building and winning orders in the future.”

In Warwick today, Mr Umunna will criticise the Tory-led Government for too often letting down jobs in Britain  and manufacturing  companies which are investing and training for the long term.

*   The decision to award a £1.5bn contract for new Thameslink trains to a company that will build these trains in Germany has resulted in Bombardier, the British train manufacturer, announcing 1400 job losses in its Derbyshire plant. This has jeopardised the future of the British train-manufacturing industry.  But the overall economic impact was not part of the government’s assessment.

*   The Government has also undermined Labour’s defence industrial strategy which supported Britain’s advanced manufacturing sector. Instead, it is choosing to buy ‘off the shelf’ from abroad as its default option. The recent announcement that BAE systems will be cutting 3000 UK jobs highlights the risks to the future of the UK manufacturing industry. But the Government’s laissez-faire approach is a complete abandonment of a hugely important part of the British economy.

In contrast, other countries in the EU have used procurement to boost jobs in cases that have been ruled legal by European case law:

*   The French government won a European Court of Justice case against the European Commission that it is legal to include criteria about combating unemployment in the criteria used to award government contracts.

Case C-225/98 Nord-Pas-De-Calais Region (Commission v the French Republic) in 1998

*   The Dutch government won a European Court of Justice case against the Beentjes Company that it is legal to include a criteria requiring at least 70% of the workforce on the contract awarded are recruited from the long-term unemployed in 1988. The court ruled this type of social clause as compatible so long as it does not discriminate against foreign companies.

Case 31/87: Geobroddeders Beentjes v The Netherlands

*   As several European countries recognise, value for money for taxpayers is not simply about who can win the contract for the lowest price. It’s also about impact on local jobs, skills and the long-term future of British industry.