Public Spending

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Ethical Consumer Magazine looks at a new report outlining how the government could spend public money in support of social and environmental objectives.

As Tony Blair got his feet under the table for a second term in 2001, ECRA decided it was time to publish a “Manifesto for Change.”

High on our priority list was requiring public sector institutions including national governments, the civil service, local and regional governments, quangos and public sector providers like educational institutions, health and social services to purchase ethical goods.

The manifesto contemplated a sustainable future, where the environment is respected, where human rights are protected and animals are free from cruel exploitation. In short an all-round fairer and more just world was envisioned.

So it was with some interest that we read the Procuring the Future report that was published in April 2006. The report was compiled by the government-appointed Sustainable Procurement Task Force, and looks at how the government could spend the £150 billion of public money it has to throw around in support of wider social and environmental objectives. The government is due to formally respond in the Autumn.

Overview of Task Force recommendations

1) Lead by example

The report identified that sustainable procurement must be a leadership priority and that it must be assigned to a chosen individual within a government department who would take responsibility for delivering the project. This section also included the action that: “Public sector audit organisations must make it clear that they are auditing for long-term value for money and thus for sustainability. Managers must be held to account for failure to meet minimum standards.”

2) Set clear priorities

The report noted that a framework should be developed with clear targets and sanctions for non-compliance.

3) Raise the bar

Existing minimum standards for central government should be properly enforced and extended to the rest of the public sector, with further standards being developed in areas of priority such as construction, energy and food. This includes not awarding contracts to products and services that fall below this.

4) Build capacity

Not knowing how much is spent on what, by whom and with whom, was impeding the sustainable procurement process. So the skills deficit on putting sustainability into practice should be addressed, with the recommendation that the government should create a delivery team.

5) Remove barriers

The task force noted that whole life costing was not being put into practice, and that the focus on lower up-front costs were perceived as barrier to sustainability. Currently procurers were focusing on short-term efficiency savings at the expense of long-term benefits, with even short paybacks being rejected because they did not pay back in the budget year. This section also includes the proposal that the government should develop a mechanism for rewarding any savings made by one department on behalf of another.

6) Capture opportunities

Ten priority areas were identified, including construction, health and social work, food, uniforms, waste transport, paper and printing and energy. These were specifically chosen to help the public sector reduce its procurement footprint in carbon, water and waste. The report also noted that better engagement with suppliers, including the third sector and social enterprises, would allow more benefits to be realised.

Delivery of goals

The report includes a table showing the changes which would enable these goals to be achieved. These range from level 1 to level 5. The Task Force wants all organisations to be at Level 1 in all areas by April 2007, at Level 3 in all areas by December 2009, and at Level 5 in one area by 2009. These targets need to be met if the UK is to meet its stated goal of being the European Union leader in sustainable procurement by 2009.

Positive steps

There are plenty of positive signals in the report. The commitment to lead the European Union on sustainable procurement, with an achievement date of 2009, is encouraging.

So is the recognition that sustainability encompasses more than just environmental issues, for example on supply chains for clothing and uniforms. The recognition that not purchasing reduces our environmental and social footprints is also positive, as is the prioritisation of certain goals, as this could mean that high priority goals are achieved.

One of the first recommendations in the report is for a named person in a government department to take responsibility for delivering the strategy. Friends of the Earth was making this criticism of the government’s sustainable development strategy in 2005, saying it was “disappointed that there was no clear picture of who will have overall responsibility for making the strategy work in practice.”[3]

The plan proposes that the Office of Government Commerce (which is an executive agency of the Treasury) takes responsibility, with permanent secretaries held accountable by audit bodies.

Beyond voluntary commitments

The findings of the task force and the barriers identified aren’t new or particularly progressive. Many people were highlighting them 10-15 years ago, but the problem has been the lack of political impetus to make it a reality.

The government’s forthcoming response was the absolute crux of the matter for Ben Tuxworth from Forum for the Future, who said that it “would be a significant shift if the government adopted the minimum standards outlined in the report and permanent secretaries were given targets on procurement.”[3]

Within days of the report’s publication, cabinet secretary Gus O’Donnell was appointed to ensure the government responded, and pledges on carbon neutrality for cabinet offices by 2012, and recycling 75% of waste were outlined.

The report says that “managers must be held to account for failure to meet minimum standards,” and this is a step forward from the voluntary recommendations of previous reports. Mallen Baker, development director at Business in the Community and part of the Task Force, said “I don’t think the government response will take the form of legislation” as he believed the differences between departments could make it difficult to develop a one-size-fits-all approach.[1]

However, Ben Tuxworth believes that if the government adopts the minimum standards this would lead to real change.[3] This was echoed by Ed Mathews, Head of New Economics at Friends of the Earth, who expressed his frustration with the government’s emphasis on voluntary recommendations which failed to deliver on sustainability.[5]

Mainstream environmental charities like Greenpeace and Friends of the Earth admitted they did not have detailed knowledge of the report. Sarah Shoraka from Greenpeace explained that there are so many Task Forces and initiatives that make excellent recommendations but aren’t taken any further.[6]

Both organisations expressed their frustration that the government had ignored ten years of campaigning on timber procurement.[5,6] The public sector procures 30% of all timber sold in the UK, and does not yet compel local authorities to purchase FSC certified timber, despite making statements on sustainably sourced wood in 2001.[5]

The report proudly proclaims that “a central point of expertise for timber (CPET) has been established as well as guidance and model terms and conditions. Since the introduction of this, an increase in demand for certified timber products from UK public sector bodies has been reported.” Sarah Shoraka from Greenpeace has also been concentrating on CPET, noting that the government had failed to follow its own guidelines on sourcing timber.[6]

In July, Greenpeace activists scaled Admiralty Arch and hung a banner highlighting that the renovation of Tony Blair’s Cabinet Office building was using illegally logged rainforest timber. The refurbishment included plywood hoardings made with illegal timber from Papua New Guinea.

The ‘best value’ clause

Despite the scepticism from organisations on the front-line of environmental protection, the report has the potential to be a watershed if procurers are enabled to cost the whole life of a product and award contracts on the basis of this over lowest price.

A survey conducted by Forum for the Future, commissioned by the Task Force, had found that price was the significant driving factor for procurement professionals, even though the “bulk of them work in organisations with much more lofty strategic ambitions.”[4] Ben Tuxworth commented that “the mismatch in the public sector is particularly stark, with buyers even more focused on cost... than their private sector counterparts.”[4]

The idea that improved procurement will reduce rather than add to public spending is repeated throughout the document. For example, using video links instead of transporting prisoners for remand hearings is better value than the original costs of purchasing the video conferencing.

Commenting in 2005, Friends of the Earth were: “very concerned that the Government’s sustainable development indicators too often consider environmental impacts in relation to gross domestic product, rather than in relation to state of the environment. ”

The report fails to address the fact that some purchasing has impacts that are being externalised. For example, air travel has massive impacts on climate change that are not being addressed in costs incurred by the industry, or public sector workers’ business travel. Aviation is not specifically referred to in the report.

The report also omits to mention the impacts of consuming meat in its focus on food. The amount of land used for grazing worldwide has tripled in the last 40 years, whilst much of the earth’s grazing land is degrading, leading to soil erosion and desertification. It also takes between 2 and 10kg of grain feed to produce 1kg of animal protein, which means that meat is a highly inefficient way of serving our desire for protein.

There is absolutely no mention of animal welfare within the Task Force’s remit of sustainability.

Once upon a time social justice issues were thought to be outside the remit of sustainability, but nowadays development organisations such as Oxfam and Christian Aid are increasingly combining front-line work combating hunger and poverty with considerations of the long-term environmental impact of human activities. Ethical Consumer included a feature on the links between sustainability and animal welfare in issue 99.

Given the significant effort behind the Task Force report, and deadlines within it only six months away, there appears to be a window of opportunity in the last three months of 2006 to put pressure on the government to accept the report’s recommendations. The key recommendation is for mandatory targets and the adoption of this element by the government will make all the difference between a genuine program and another raft of empty promises.

The Task Force itself is made up almost entirely of industry representations, so even big business can see the obvious win-win for society within a genuine program. With early indications that the government will try to avoid mandatory targets,[8] there is an opportunity of embarrassing New Labour by painting it as less progressive even than industry on this subject.

We therefore ask individuals and other campaign groups to support our call for a government commitment to mandatory targets in its Autumn response to the Task Force report. You could help us by contacting your parliamentary representatives and letting us know what they say.

Ethical Consumer believes sustainable purchasing is important because:

consumers cannot be expected to take sustainable consumption seriously when it is obvious that government itself does not;
powerful institutions with large budgets can persuade companies to address ethical issues very quickly;
research carried out by governments on which products, processes or companies to favour can be placed in the public domain to inform consumers and private sector buyers;
government purchasing can stimulate markets and lower prices for innovative ethical and environmental products;
it is likely to be economically inefficient for society to absorb social and environmental costs after the event. For example, it may be better for public sector organisations to buy exclusively renewable energy now, rather than pay for the costs of addressing climate change later on;
talking about spending the money might just encourage interest and participation in the political process.