Central government has issued new guidance for public sector commissioners, requiring them to “maximise procurement spend” with voluntary, community and social enterprise (VCSE) organisations.
The Cabinet Office’s procurement policy statement, published last week, states that all central government departments including executive agencies and non-departmental public bodies must set a two-year direct spending target with the VCSE sector by 1 April 2026.
The statement also addresses public spending with small and medium-sized enterprises (SMEs) and aims to drive economic growth and strengthen supply chains.
It names as a priority that contracting authorities give SMEs and VCSEs a “fair chance at public contracts, creating high quality jobs and championing innovation”.
The targets must be achieved by the financial year ending in March 2028, with all relevant public bodies required to publish their results annually.
Commissioners can also voluntarily set targets and report on their indirect spending on top of direct spending if they wish.
The procurement policy does not apply to NHS and foundation trusts nor to contracting authorities whose functions are devolved.
‘The start of something really significant for communities’
Ed Wallis, director of policy and engagement at Locality, a membership body for community organisations, said in a blog post: “This could be a gamechanger. We have long argued that commissioning should be ‘local by default’.
“And while it’s more than possible in the current regime, not least through use of grants, it has proved hard to make it happen in reality.
“It requires commissioners to really want it, and be prepared to expend energy cajoling colleagues and shifting a system whose incentives go in a different direction.
“Indeed, we’ve argued that certain person-centred services shouldn’t be part of the competitive procurement process at all, but instead something councils and communities co-create together.
“The new procurement statement starts to turn the tide.
“Changing the spending rules could be a transformative shift towards making ‘keeping it local’ the mainstream priority of procurement, rather than ‘a nice to have’ for those who really want to make it happen.”
‘It is essential that authorities commit to commissioning charities’
Sarah Elliott, chief executive of NCVO, told Civil Society: “It’s encouraging to see the Government set targets to partner with more VCSE organisations to deliver public services in the years ahead.
“Charities have the expertise and deep community connections needed to deliver essential public services, which is why the sector already delivers over £14bn worth of public services on behalf of government.
“However, current contracts are often critically underfunded, and the cost of delivering them continues to rise. Without the vital uplifts needed to meet the increased costs, organisations are often forced to subsidise the true cost of delivery using cash reserves and public donations, or hand back contracts all together.
“It is essential that authorities commit to commissioning charities with the fair and sustainable funding needed to deliver public service delivery ambitions.”
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