The Friends and Family Discount on Public Money
Four years after the pandemic exposed the rotten heart of British public procurement, the culture of chumocracy remains as entrenched as ever. While ministers speak of transparency and value for money, government contracts worth billions continue to flow to firms whose primary qualification appears to be their proximity to power rather than their ability to deliver.
The latest analysis of government spending reveals a system that has learned nothing from the PPE scandals that saw £8.7 billion wasted on unusable equipment purchased from companies with no relevant experience but excellent political connections. Today's procurement landscape shows the same patterns: hastily awarded contracts, limited competition, and a remarkable tendency for work to land with firms employing former ministers or major party donors.
When Transparency Becomes Theatre
The government's response to past scandals was to strengthen transparency requirements under the Public Contracts Regulations 2015. On paper, this should have created a more open system where contracts are advertised publicly, competition is genuine, and awards are justified on merit. In practice, these mechanisms have been systematically undermined through a combination of emergency procedures, framework agreements, and the creative use of exemptions.
The "urgent operational requirement" has become the procurement equivalent of a get-out-of-jail-free card. Originally designed for genuine emergencies, it's now routinely deployed to bypass competitive tendering for everything from consultancy services to major infrastructure projects. The Cabinet Office's own data shows that direct awards—contracts given without competition—have increased by 340% since 2019, with the pandemic providing convenient cover for what has become standard practice.
Framework agreements offer another route around competitive procurement. These pre-approved lists of suppliers are supposed to streamline purchasing while maintaining competition. Instead, they've become exclusive clubs where getting on the list matters more than winning individual contracts. Once you're in, the work flows with minimal scrutiny, creating a two-tier system where insiders feast while outsiders are locked out entirely.
The Revolving Door Dividend
The most pernicious aspect of this system is how it rewards the revolving door between government and private sector. Former ministers, special advisers, and senior civil servants don't just take jobs with companies seeking government contracts—they become the living embodiment of those companies' competitive advantage.
Consider the defence sector, where former Defence Secretary Liam Fox now advises Abraham Accords Investment, which has secured multiple government contracts since his appointment. Or the technology sector, where former Cabinet Office minister Francis Maude chairs the board of Palantir, the controversial data analytics firm that has won contracts worth hundreds of millions from departments where Maude once held sway.
This isn't corruption in the traditional sense—no brown envelopes change hands, no explicit quid pro quo arrangements are made. It's something more sophisticated and arguably more damaging: a system where public service becomes a form of extended job interview for lucrative private sector roles, and where companies invest in political relationships as a core business strategy.
The Human Cost of Crony Capitalism
While the well-connected prosper, the real cost falls on those who depend on public services. Every pound diverted to overpaid consultants or underperforming contractors is a pound not spent on teachers, nurses, or social workers. Every botched procurement exercise—from the NHS Test and Trace system to the abandoned Green Homes Grant—represents not just wasted money but missed opportunities to address genuine social needs.
The housing sector provides a particularly stark example. While government contracts for property development and management services flow to large firms with political connections, smaller local contractors and housing associations struggle to access the same opportunities. The result is a system that favours scale and connections over local knowledge and community accountability, contributing to the broader housing crisis that locks millions out of decent homes.
Beyond the Usual Suspects
Critics of procurement reform often argue that government needs to work with experienced suppliers who understand the complexities of public sector delivery. This misses the point entirely. The problem isn't that government works with large, established firms—it's that the selection process is distorted by factors that have nothing to do with competence or value for money.
A genuinely competitive system would still see major contractors winning significant work, but they would do so on merit rather than connections. Smaller firms, social enterprises, and innovative startups would have genuine opportunities to compete. Most importantly, the constant threat of losing contracts to better-performing competitors would drive up standards across the board.
The Democratic Deficit
This isn't just an economic issue—it's a democratic one. When public money becomes a reward system for political loyalty, it undermines the basic principle that government exists to serve all citizens, not just those with the right connections. It creates a class of businesses whose success depends more on political access than market performance, distorting both politics and economics in the process.
The current system also makes meaningful opposition harder. When so much private sector employment depends on government contracts, there's an inevitable pressure to avoid criticising the hand that feeds you. This creates a form of soft censorship where legitimate policy debates are muted by commercial considerations.
A Blueprint for Real Reform
Reforming public procurement requires more than tweaking transparency rules or adding extra bureaucracy. It needs a fundamental shift in culture and incentives. This means ending the abuse of emergency procedures, requiring genuine competition for all major contracts, and creating meaningful penalties for poor performance.
It also means addressing the revolving door directly. Former ministers and senior officials should face extended cooling-off periods before joining companies that bid for government work. Procurement decisions should be made by civil servants with no political connections to the firms involved.
Most importantly, parliament needs to reclaim its role in overseeing government spending. The current system of post-hoc scrutiny by select committees is inadequate when billions are being committed through processes that bypass normal democratic oversight.
The Choice We Face
The persistence of chumocracy in public procurement represents a choice about what kind of society we want to be. We can continue with a system that treats public money as a private members' club, where success depends on who you know rather than what you can deliver. Or we can build a system based on genuine competition, democratic accountability, and the radical idea that government contracts should serve the public interest rather than private connections.
The stakes couldn't be higher: in a time of austerity and squeezed public budgets, we cannot afford to waste billions on a procurement system that puts politics before performance and connections before competence.
