How the EU procures UK public money
Under EU rules Labour’s spending spree is a goldmine for EU27 companies.
A little-mentioned fact about EU membership is the EU’s control over the €2 trillion of public sector contracts of EU countries each year — at least when these countries obey the rules, as the UK does.
Government and local authority major spending must be put out for tender to all EU countries. This is a huge sum each year.
The UK’s total general government expenditures on works, goods, and services — excluding utilities — equated to 12.8% of UK GDP in the latest report published by the EU.
In cash terms, this amounted to €300 billion (£259 billion GBP) for the UK’s contracts alone in 2017, and that was without including utilities like water and electricity, and without including defence contracts.
Put simply, UK public sector spending is a potential goldmine for the EU. Forced to put its public sector contracts out to tender to the whole of the EU, any Remainer UK government — either Labour or a Labour-led coalition of LibDems, Greens Plaid and the SNP — will see significant numbers of UK jobs going to German, French or other EU27 companies.
Public procurement within the EU
Public spending contracts awarded for works and for goods under the EU’s General Directive
Of 21,964 works contracts awarded, only 561 went to UK companies (2.6%)
Of 57,196 goods contracts awarded, only 1722 went to UK companies (3.0%)
Public spending contracts awarded under ALL the EU’s Directives
Of 547,360 of ALL contract notices awarded, only 32,393 went to UK companies (5.9%)
The UK obeys the rules
The UK advertised the highest value of public spending projects — by far
€139.63 BILLION of UK public spending was advertised in the EU27, out of an EU total of €545.40
The UK was responsible for 25.6% of the value of all advertised contracts in the EU.
The list of directives and regulations which the UK and all EU27 countries are supposed to obey in respect of public procurement is now lengthy
- Public Contracts Directive (2014/24/EU)
2 Utility Directive (2014/25/EU)
3. Concessions Directive (2014/23/EU)
4. Defence and Security Contracts Directive (2009/81/EC)
5. Remedies Directive (89/665/EEC)
5. Utility Remedies Directive (92/13/EEC)
6. Passenger Transport Regulation (1073/2009/EC)
7. Licensing Regulation (1008/2008/EC)
8 Standardisation Regulation (1025/2012/EU)
9. E-invoicing Directive (2014/55/EU)
10. Thresholds Regulation (2015/2172/EU)
11. Regulation on the standard form of notices (2015/1986/EU)
12. Utilities Exemption Decision (Commission Decision 2016/1804)
13. Energy Efficiency Directive (2012/27/EU)
14. Clean Vehicles Directive (2009/33/EC)
based on latest data available (2017) from the EU Commission
Public spending is now a major topic in the general election campaign. Labour, in particular, has announced public spending plans which are larger than any government’s since the 1970s. I usually don’t comment on domestic politics except where this impacts on what can and cannot be done as a member of the EU. If Labour were backing Brexit, they would be entitled to claim that any increased public spending would provide jobs and boost the economy in the UK. However, they have made it quite plain over the past few years since the 2016 Referendum that they don't back Brexit. Given that Labour’s policy — as far as anyone can make out — appears to be to attempt to negotiate with the EU and then campaign against their own subsequent ‘deal’ in another referendum, then we must assume that their public expenditure plans will be set against a backdrop of staying in the EU.
If that is the case, the UK would continue to be bound by ever-growing directives and laws on making all public procurement contracts available to companies from the rest of the EU. This is already law, and it is being enlarged upon continuously by the EU.
Either a massive growth in UK public infrastructure spending will all be spent in the UK, or we remain a member of the EU, where a proportion of this spending will benefit German, French and other EU27 countries.
You can’t have it both ways.
Sources: EU Commission latest data (for 2017)