U.K. to Overhaul State Aid, Government Procurement After Brexit

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Boris Johnson’s administration plans to push through new government procurement rules by the end of the year, replacing what it sees as excessively “complex” procedures it was tied to in the European Union.

Bills on procurement and state aid will be included in the Queen’s Speech on Tuesday in Parliament, people familiar with the matter said. The annual event will see the monarch lay out the government’s core legislative program -- usually around 25 bills -- for the next year.

Johnson has hailed diverging from EU rules as a key benefit of Brexit, by giving the government more freedom to decide how it supports the economy and reducing red tape. Bolstered by last week’s local elections, the prime minister is now trying to deliver on that promise, after focus shifted to the pandemic soon after the divorce from the bloc was concluded.

The procurement rules will be “nothing short of a transformation” governing how some 290 billion pounds ($409 billion) of taxpayers’ money is spent, Cabinet Office Minister Theodore Agnew told the Institute for Government in March. The aim is to introduce the legislation in September, get it approved by Parliament by Christmas and gain royal assent early in 2022, he said.

Brexit provides a “golden opportunity to redesign the procurement rules in the interests of the U.K.,” he said. “Rules that are currently too complex and have made it harder for innovative companies to be fleet of foot, win business, and ultimately to deliver better public goods and services.”

‘Social Value’

The proposals will replace four sets of regulations with a single bill, and scrap seven “complex” procurement procedures in favor of a simplified three-step process, Agnew said. Government buyers will also be asked to look at the “social value” of bids, and not just prioritize the lowest price, he said.

Business Secretary Kwasi Kwarteng laid out the plans for state aid in February, which his department described as “more flexible and tailored” and allow the U.K. to be “more dynamic” in providing subsidies to British businesses.

The new system will free local authorities and devolved administrations from “bureaucratic” EU controls on taxpayer subsidies, Kwarteng’s department said. A public consultation on the proposals closed on March 31 and the government has yet to publish its findings.

“We will not, of course, return to antiquated command and control methods of economic management, or encourage wasteful use of public money by propping up failing businesses,” Kwarteng said in the consultation document. “We will instead foster a dynamic, prosperous, and outward-looking economy,” using “free markets powered by the entrepreneurial zeal of businesses.”

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