Public Procurement: Quantifying economic value in the North East

Adam Wilkinson Commissioned by One North EastApril 2007

OBJECTIVES

Quantify total public procurement expenditure in the North East and broad inward/outward investment patterns.

Analyse current economic impact of this expenditure on participation levels, productivity levels, and regional GVA, and model a baseline trend to 2016

Develop a modelling profile to evaluate the potential economic impact of this expenditure to 2016

Carry out a gap analysis to identify the potential economic contribution of public procurement expenditure to achievement of the overall 2016 RES targets

1st May 20072 Adam Wilkinson www.beyondprofit.org/procurement

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Baseline impact on GVA

GVA £m Direct Other TotalPrimary industries 1.61 2.15 3.75Secondary industries 95.63 36.74 132.37Manufacturing 49.38 22.87 72.24Energy and water 75.40 74.52 149.92Construction 342.60 121.46 464.06Services 263.18 74.34 337.52Total 827.79 332.07 1159.86

Public sector directly accounts for £10.39 m or 30.2% of total GVA

Baseline Impact FTE

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FTE Created Direct Other TotalPrimary industries 123.99 162.56 286.94Secondary industries 2854.53 917.55 3772.87Manufacturing 1945.86 901.32 2847.18Energy and water 3360.50 3410.22 6771.11Construction 7522.22 2613.56 10135.38Services 9050.13 2736.76 11787.68Total 24857.22 10741.96 35601.17

Merged Baseline impact (DBS)

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IN ADDITION TO THE 261,000 ALREADY EMPLOYED (23.7%) WORKFORCE

Projection Public Sector budgetGVA £m Direct Other Total

Primary industries 0 0 0Secondary industries -3 -2 -5

Manufacturing -3 -1 -4Energy and water -4 -4 -7

Construction -17 -6 -23Services -14 -4 -17

Total -40 -16 -56

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3% reduction in public procurement spending 2008 – 2011. Then flat to 2016

1% annual increase in regional procurement sourcing

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Combination of -3% and +1%

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Online interactive report

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Where are the opportunities ? Identify the strengths of the private sector in

the North East Strategic support to increase public sector

respend locally has measurable impact on the economy and RES objectives

Same approach has the probablility of strengthening the Regional ability to complete for national public procurement offering the double win.

Achieved only by joint working across all sectors of the economy.

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