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The SNP Government has been urged to update its outdated legislation which has led to multimillion pound contracts being sent abroad and not locally. Scotland's procurement laws date back to 2014 and have been blamed for jobs funded by taxpayer money being outsourced to the likes of Poland, Turkey and China.
Ferguson Marine and Alexander Dennis have fallen victim to these rules as bids for public contracts were won by bigger international companies who don't have to follow the same rules. The boss of the bus company highlighted that they need to pay real living wage, while organisations abroad don't
Now, the UK Government is offering to legislate in Scotland and extend its new Procurement Act north of the border to help with this issue. It is a devolved issue but the Scotland Office highlighted that the SNP have already agreed to allow Westminster to legislate in a "range of areas."
The SNP Executive's Procurement Reform (Scotland) Act came into effect in 2014 and placed new duties on public bodies to consider the wider economic, social and environmental impact of their contracts, to open up opportunities for small to medium-sized enterprises (SMEs) and the third sector.
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It also increased transparency by requiring contracts to be advertised on a single portal but the rules have not been updated since despite Brexit. Local suppliers believe that legacy EU rules favour overseas firms and means that jobs are lost to elsewhere in the world.
There is no advantage for Scottish firms bidding for contracts, with continental firms considered on an even footing. There is also no "social value" weighting in Scotland's procurement framework, unlike the UK Government and other devolved administrations which mandate a minimum 10% weighting, with this linked to jobs, skills and opportunities.
Labour said the lack of reform meant Scotland had missed out on major contracts in recent years, with ferries ordered from Poland and Turkey, and steel and buses imported from China. Ferguson Marine missed out on a £175m contract to build seven new electric ferries under the Small Vessel Replacement Programme (SVRP), with this money and jobs going to Remontowa Shipbuilding in Poland. Cemre Shipyard in Turkey also won public contracts.
Alexander Dennis, one of the country's historic bus makers, has been hit hard by international pricing pressures and may relocate production to England. The Scottish Government commissioned more electric buses from China than the Falkirk-based company.
Scottish Secretary Ian Murray said: "In a range of areas the SNP have agreed that the UK Labour Government should legislate in Scotland to deliver faster change, and this change to public contracts to rewrite the rules to support local jobs would be a massive benefit for Scottish industry.
"The SNP hasn't updated legislation on public contracts since 2014. Meanwhile, jobs supported by Scottish taxpayer money, which could have gone to Scottish workers, have been outsourced to Poland, Turkey and China. Labour will rewrite the rules to support Scottish jobs and boost Scottish industry. The SNP should work with us to get these changes onto the statute books in Scotland as soon as possible."
Scottish Public Finance Minister Ivan McKee said: "It is good that the UK Government is catching up with Scotland - many of its proposals resonate with legislation made in Scotland over a decade ago. Devolved authorities are already required to consider the economic, social and environmental wellbeing impact of procurement; consider community benefits in major contracts; and set out how they ensure payments are made within 30 days down the supply chain.
"Scotland is leading the way with spend on small and medium-sized businesses, with 47.5% of our public sector procurement spend going to SMEs. Figures reported in 2024 show that south of the Border that number is only 20%, so it's not surprising that the UK Government is taking steps to try and catch up with Scotland." The Scottish Government said it had received Ms Gould's letter and would respond in due course.
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