Market Sector - innovation solutions
Public procurement in the UK affects the lives of all citizens and is a major driver for economic growth and regeneration.
The requirements of public sector bodies encompass virtually every product and service imaginable. Overall, the public sector spends in the region of £220 billion a year on products and services, of which around £14 billion is spent on defence, £20 billion on the NHS and £44 billion on construction projects (around 40% of the total spent on construction in the UK).innovation solutions
Public spending remains a key focus for the UK government and, because of this, public procurement is enjoying a higher profile than ever before. The demands of reducing expenditure while maintaining the quality of public services are challenging both buyers and suppliers to rethink their approach. While the reduction in public spending presents a challenge for BiP, it also creates opportunity as buyers seek more efficient and effective procurement and suppliers seek more intelligence on current and future opportunities.
The government’s drive towards data transparency, particularly in the area of public spending, also has significant benefit as it reveals more detail of buyer activity and which suppliers are serving this market sector.
The UK is seen as a leader within public procurement, particularly by countries that have less sophisticated procurement practices and supply chain engagement. As a prominent supplier to this sector, BiP benefits from the UK’s solid reputation in this area and, as a consequence, has exported its services to countries such as Kosovo, Macedonia, Montenegro and the UAE. BiP has also hosted study tours on behalf of the governments of China, Montenegro and Tanzania.
Total public spending in the UK is forecast to be £683 billion in 2011, compared to £660 billion in 2010. Spending is expected to rise to £703 billion in 2012.
The delivery of high-quality public services is set to be a key focus for government in the coming years, as it attempts to balance the need for savings with continued investment in high-priority areas. The private sector will play a significant role in assisting government with its objectives and the profile of procurement as a profession, function and delivery mechanism will also increase.
The UK awards 3% of public procurement by value to foreign suppliers, compared to 1.9% in Germany and 1.5% in France.
Government Spending 2011-12
- Social protection – £200 billion
- Personal social l services – £32 billion
- Health – £126 billion
- Transport – £23 billion
- Education – £89 billion
- Defence – £40 billion
- Industry, agriculture and employment – £20 billion
- Housing and Environment – £24 billion
- Public order and safety –£33 billion
- Debt interest – £50 billion
- Other – £74 billion
Public spending is projected by the OBR to fall from around 47.5% of GDP in 2009-10 to around 40% of GDP by 2015-16, while tax receipts are projected to rise from 36.5% to around 38.5% of GDP over the same period, addressing the imbalances in the public finances.
(Data in this section has been researched from a number of government sources. While every effort has been made to ensure accuracy, this is not guaranteed.)
Key Facts »
- Government continues to be the largest single customer for UK industry.
- There is a drive towards centralised contracts, the appointment of prime contractors and the opening up of sub-contractor opportunities to smaller businesses.
- As collaborative procurement and framework contracts increase in usage, so the need for market intelligence about buyer and supplier activities is increasing.
- The Freedom of Information Act is driving the need for the public sector to be seen to have open and auditable tendering processes.
- The European Court of Justice has ruled that all public contracts, no matter what value, should receive appropriate advertising.
- The UK Government and European Commission view the process of opening up public tendering opportunities to more small and medium-sized enterprises (SMEs) as a key policy.
- The Government's aim is to deliver world-class public services through sustained investment and ongoing reform.
Procurement by Sector »
- Defence has one of the largest UK procurement budgets, currently £14 billion a year. Defence requirements include expenditure on military and non-military requirements; everything from aircraft carriers to clothing.
- Total defence spending will be in the region of £40 billion for 2010-11.
- In total, planned spending on counter-terrorism and resilience across departments was forecast to be more than £2 billion by 2007-08, compared to less than £1 billion prior to 11 September 2001.
- Education has been a key area for government spending in recent years.
- Total spending on education in the UK is forecast to be over £89 billion in 2010-11.
- Capital spending in education will rise from £8.3 billion in 2007-08 to £10.2 billion in 2010-11 – a total of £36 billion over four years.
- The UK health service has recently been through a period of radical change and increased investment.
- By 2007-08, UK health spending was projected to reach 9.4% of GDP compared to the current European Union average of around 8%.
- Total spending on health in the UK for 2010-11 is planned to be £126 billion.
- The public sector commissions around 40% of construction work in the UK each year at a cost of over £44 billion.
- Public sector food procurement represents around 7% of the £26 billion total UK market for food and catering services.
- The Scottish Government's total budgeted expenditure for 2011-12 is £28 billion.
- Scottish Government spending on local government for 2011-12 will be £9 billion.
- The Scottish Government’s spending on health and well-being for 2011-12 will be in the region of £11.3 billion.
- The Welsh Government’s total budgeted expenditure for 2011-12 will be £15.1 billion, of which £5.7 billion will be allocated to health and £4.3 billion to social justice and local government.
- The Northern Ireland Executive’s total budgeted expenditure for 2011-12 will be £10.3 billion, of which £4.3 billion will be allocated to health and £1.9 billion to education.