Public procurement is a powerful lever for shaping local economies, yet it is still too often treated as a compliance exercise rather than a strategic tool.
This two part research series from IPEC, authored by Conrad Parke of the Centre for Local Economic Strategy, explores how procurement can be used more deliberately to support SMEs and social enterprises, strengthen local supply chains, and deliver wider social, economic and environmental value.
The research is set against the introduction of the Procurement Act 2023, in force from February 2025, alongside the updated National Procurement Policy Statement. Together, these reforms create a stronger policy framework that encourages more proportionate, accessible and outcome focused procurement. However, the Act remains permissive rather than mandatory, creating a real risk that progress will be uneven and opportunities missed.
Part 1 Local approaches to public procurement – Birmingham Anchor Network revisited revisits earlier IPEC research on practising innovation in public sector procurement and examines how the Birmingham Anchor Network could take a shared, place-based approach to implementing the new legislation. Drawing on a cross institutional roundtable held in April 2025, it sets out the case for greater coordination across anchor institutions, including clearer definitions of barriers faced by SMEs and VCSEs, shared ambitions for local spend, and a more consistent understanding of what proportionate procurement means in practice.
Part 2 Local approaches to public procurement – evidence from local procurement practices complements this strategic perspective with a practical focus on what can be done now. It presents real world case studies that show what is lawful, workable and already delivering impact, including the use of reserved contracts, contract lots, and the direct embedding of social value into contract design. These examples demonstrate how targeted changes to procurement practice can reduce risk aversion, build confidence, and unlock immediate benefits for local economies.
Taken together, the two briefings show that meaningful change does not need to wait for system wide reform. How contracts are designed matters as much as how much is spent, and smarter procurement can play a central role in driving inclusive growth, strengthening local markets, and accelerating progress towards net zero.
Local Approaches to Public Procurement – Birmingham Anchor Network Revisited
File type: pdf
File size: 2.07Mb
Local Approaches to Public Procurement – Evidence from Local Procurement Practices
File type: pdf
File size: 1.85Mb
Related articles
Public procurement accounts for around 14 percent of UK GDP. This gives the public sector significant influence over how new ideas are developed and adopted, and how major societal challenges are addressed. In practice, using procurement to support innovation is often difficult.
In sectors such as healthcare and defence, buyers face strong pressure to reduce costs, work within established frameworks and avoid risk. These conditions can make it hard to introduce new technologies, even where there is clear potential to improve services through tools such as artificial intelligence, robotics or advanced manufacturing.
This research explores the role of innovation intermediaries and the practical value they bring. Drawing on examples from the defence sector and the NHS Health Innovation Network, it shows how intermediaries help public buyers and suppliers work together more effectively. They create space to define problems clearly, test ideas early and support the move from promising concepts to real world use.
Intermediaries help address challenges on both sides of the market. They support research and development activity, run demonstrations and evaluations, and help build the technical and commercial evidence that buyers need to make informed decisions. They also assist with shaping specifications, mentoring teams and navigating unfamiliar processes. In doing so, they help loosen rigid rules and norms that can slow progress, and promote more flexible approaches to contracting and delivery.
By building shared understanding and trusted evidence, intermediaries help reduce risk, sharpen requirements and speed up decision making. This can lead to faster adoption of new solutions, better value for money and improved public services. At the same time, intermediaries often operate with limited authority and resources. The findings point to the need for stronger policy support, and for public bodies to build their own capability to work with intermediaries in a more confident and effective way.
How innovation intermediaries support public procurement of innovation
File type: pdf
File size: 1.52Mb
Related articles
Public procurement under the Procurement Act 2023 aims to drive innovation and social value through flexible, strategic practices. This brief outlines key lessons for effective implementation.
Public procurement plays a vital role in driving innovation, strengthening supply chains and supporting economic growth across the UK. With the introduction of the Procurement Act 2023 and the National Procurement Policy Statement (NPPS), public authorities are being encouraged to take a more flexible and strategic approach.
This includes engaging early with suppliers, opening opportunities for Small and Medium Enterprises (SMEs) and social enterprises, and using procurement to deliver wider social, economic and environmental benefits.
Our research briefs examine how these ambitions can be realised in practice. It is presented in two parts:
Transforming UK Public Procurement in the Post-Brexit era: Part 1
File type: pdf
File size: 3.25Mb
Transforming UK Public Procurement in the Post-Brexit era: Part 2
File type: pdf
File size: 2.97Mb
Together, these sections explore the key policy goals of the new procurement regime and draw practical lessons from the Social Value Act 2012. The research considers how insights from past reforms can inform the transformation of public procurement practices and capabilities in the post-Brexit era.
The brief identifies five main lessons to support successful implementation of the Procurement Act 2023:
Related articles
Pey-Yu Yuan
Alliance Manchester Business School,
University of Manchester
Raquel Ortega-Argilés
Alliance Manchester Business School
University of Manchester
Elvira Uyarra
Alliance Manchester Business School
University of Manchester
The Role of Government Buyers in Shaping Firm Productivity
Public procurement is a major economic force in the UK, accounting for £385 billion annually. While procurement is widely recognised for its ability to stimulate innovation, create market opportunities, and drive social value, its direct impact on firm productivity remains underexplored. This research brief examines how government contracts influence business performance, analysing trends in procurement income, supplier composition, and the effect of different government buyers—central government, local government, and the NHS—on firm productivity.
Using data from 26,411 UK suppliers between 2016 and 2019, this study uncovers key trends in supplier distribution, sectoral participation, and the non-linear relationship between public procurement and firm productivity. By understanding the dynamics of government purchasing power, both businesses and policymakers can refine their strategies to maximise economic impact and efficiency.
Key Findings
Implications
For firms, winning contracts is about more than just volume—it is crucial to consider the type of government buyer. Diversifying across multiple government entities can reduce risks, stabilise revenue streams, and improve productivity outcomes.
For policymakers, procurement strategies should move beyond just awarding contracts and instead focus on reducing inefficiencies, supporting diverse supplier participation, and fostering a more innovation-friendly procurement ecosystem.
This research offers data-driven insights for businesses and policymakers navigating public procurement, exploring who supplies the government, how procurement influences firm performance, and which government buyers provide the best opportunities.
The role of government buyers in shaping firm productivity
File type: pdf
File size: 4.47Mb
Fumi Kitagawa
City-REDI, University of Birmingham
Public procurement is a powerful tool for economic growth, innovation, and social impact. Local governments play a crucial role in shaping regional economies by using procurement strategies to stimulate innovation, create jobs, and deliver social value.
This research brief explores how public procurement can be used strategically to address regional needs, particularly in a time of constrained public resources. The West Midlands serves as a prime example of how procurement policies can drive place-based transformation. The West Midlands Innovation Programme (WMIP) supported Digital Innovation in Public Services (DIPS) project, which presents how a region can create values through procuring innovation. The Innovation procurement partnership model demonstrates how local authorities can foster economic and social values through strategic partnerships. By integrating procurement with local industrial strategies, the region enhances SME participation, promotes green innovation, and delivers measurable social value.
Key Highlights:
By adopting a place-based approach, local governments can tailor procurement policies to address specific regional economic and social challenges. The findings from the West Midlands serve as a valuable guide for policymakers, businesses, and researchers seeking to maximise the impact of public procurement on regional development.
Place-based collaborative opportunities and challenges for public procurement of innovation
File type: pdf
File size: 4Mb
Elvira Uyarra
University of Manchester
Rikesh Shah
Connected Places Catapult
This research brief discusses the implication of recent policy developments, including the National Procurement Policy Statement (NPPS) and the Procurement Act 2023, which highlight the potential for procurement to drive local economic growth and innovation. It argues that, in order to harness the full potential of public procurement for regional development, a shift towards more strategic, innovation-friendly, and regionally sensitive procurement practices will be needed. Key recommendations of this brief include:
For further insights into procurement’s role in regional development and innovation, refer to research by the Innovation Procurement Empowerment Centre (IPEC), which continues to analyse procurement strategies, spending patterns, and policy impacts across the UK.
Public Procurement and Regional Development in the UK: Challenges and Opportunities in a New Policy Landscape
File type: pdf
File size: 2.6Mb
Annum Rafique
City-REDI, University of Birmingham
Pei-Yu Yuan
Alliance Manchester Business School
Understanding trends in public sector spending, supplier engagement, and funding allocation effectiveness is crucial in building trust in the government. A comprehensive understanding of procurement contracts enhances accountability and provides actionable intelligence for policymakers and stakeholders, enabling them to assess the effectiveness of procurement strategies and monitor progress toward sustainability goals.
This research brief explores the methodological approach of text mining and using it for procurement contract analysis. The approach focuses on keyword-based filtering and data extraction to identify relevant contracts, providing a practical approach for researchers, policymakers, and stakeholders without specialised expertise in natural language processing (NLP) or machine learning.
Using the methodology, we analysed structured data from Tussell database for the year 2022, examining social housing retrofitting contracts in the West Midlands. To gain a deeper understanding of the procurement landscape in the West Midlands Combined Authority (WMCA) area, a subregion within the broader West Midlands, refer to the IPEC publication: “Retrofitting Social Housing in the West Midlands Combined Authority (WMCA) Area”. This report by Annum Rafique (2025) provides valuable insights into procurement challenges, supply chain dynamics, and policy considerations specific to the region.
Applying the text mining methodology to Tussell’s procurement data provided several key insights:
These findings provide a data-driven foundation for improving procurement strategies, enabling policymakers to extend contract durations, support regional supplier development, and enhance SME participation. The insights derived from this methodology support evidence-based decision-making and reinforce procurement as a strategic tool for driving innovation, economic resilience, and the transition to a low-carbon economy.
Extracting Insights from Procurement Data – A Text Mining Approach for Social Housing Retrofits in the West Midlands
File type: pdf
File size: 4.42Mb
Authors
Xiuqin Li
Alliance Manchester Business School
Xin Deng
Alliance Manchester Business School
Elvira Uyarra
University of Manchester
Knowledge-Intensive Business Services (KIBS) are the cornerstone of innovation in a knowledge-based economy. Acting as facilitators, carriers, and sources of innovation, KIBS firms play a pivotal role in enhancing both public and private sector capabilities. These services encompass a wide range of expertise, from accountancy and management consultancy (Professional KIBS or P-KIBS) to IT and R&D services (Technology-based KIBS or T-KIBS).
Public procurement offers an invaluable opportunity for fostering innovation through KIBS. By serving as suppliers to government agencies, KIBS firms contribute to technological advancements, public service transformation, and regional economic growth. Our research analyses the dynamics of KIBS engagement in UK public procurement from 2016 to 2022, shedding light on patterns, trends, and opportunities.
Key Findings:
To maximise the contributions of KIBS, especially SMEs, to public procurement and innovation, the following strategies are essential:
KIBS firms hold immense potential to drive innovation, economic growth, and public service transformation. However, achieving this requires a nuanced approach that balances the strengths of T-KIBS and P-KIBS, promotes regional diversity, and ensures sustainable procurement practices. By addressing these challenges, public procurement can unlock the full potential of KIBS to reshape the innovation landscape.
Exploring the roles of public procurement on the performance of Knowledge intensive business services (KIBS)
File type: pdf
File size: 4.61Mb
Annum Rafique
City-REDI, University of Birmingham
The UK is at a critical point in its transition to a net-zero future, with one of the most urgent challenges being the retrofitting of social housing to transform them into energy-efficient, low-carbon homes to meet the 2050 net-zero targets. While the benefits of this transition are apparent (lower emissions, higher living standards, and cheaper energy prices), attaining it will necessitate overcoming numerous barriers. Public procurement is at the heart of this challenge: the mechanism through which funding is secured for projects, quality is maintained, and key stakeholders are aligned.
This research brief explores the procurement barriers associated with retrofitting social housing in the West Midlands Combined Authority (WMCA) area and the innovative solutions and initiatives used to overcome them. Key barriers, such as financial constraints, quality assurance concerns, and coordination complexity, are examined alongside actionable solutions implemented in the area. The WMCA area serves as a good example of how to address the intricacies of retrofitting at scale. Securing funding through initiatives such as the Social Housing Decarbonisation Fund (SHDF), as well as collaborations with industry and academia, has allowed local and regional governments in the WMCA area to address funding constraints, ensure quality assurance, and develop a skilled workforce capable of driving low-carbon transitions.
By fostering collaboration and embracing innovative procurement approaches, the area is transforming challenges into opportunities, setting a benchmark for progress in the housing sector. By leveraging these strategies, policymakers, researchers, and stakeholders can accelerate the transition to energy-efficient social housing.
Key Points from the Brief:
Retrofitting Social Housing in the West Midlands Combined Authority (WMCA) Area: Overcoming Procurement Barriers for a Net-Zero Future
File type: pdf
File size: 3.29Mb
Elvira Uyarra
University of Manchester
Pei-Yu Yuan
Alliance Manchester Business School
Xin Deng
Alliance Manchester Business School
Raquel Ortega-Argilés
Alliance Manchester Business School
Public procurement represents a pivotal mechanism for fostering innovation, constituting nearly 15% of GDP in OECD countries. In the UK, this accounts for a significant portion of public expenditure, with SMEs playing a vital yet underutilised role. This research publication investigates how public procurement influences SME innovation, with a particular focus on patenting activity from 2016 to 2019.
Key Findings:
SMEs constitute 99% of UK businesses yet account for only 20% of direct public procurement spending. Despite this, the research highlights procurement’s stabilizing influence on innovation, even amidst challenges such as delayed patent data capture and economic disruptions.
Central Government’s Strategic Impact: Central procurement supports cutting-edge innovation tied to national priorities, showcasing the potential of large-scale contracts to steer technological advancements.
Local Government’s Regional Focus: Local procurement enhances community-level infrastructure and applied technological solutions, aligning regional innovation efforts with broader policy objectives.
To unlock the full potential of SMEs in driving innovation, the following strategies are recommended:
Public procurement and SMEs’ innovation in the UK
File type: pdf
File size: 5.66Mb
