Cabinet Office calls for public sector spin-outs to be exempted from EU procurement rules

Government's response to the European Commission green paper says employee-led spin-outs should have time to run services before having to compete with big business

Cabinet Office
Cabinet Office

The Cabinet Office is trying to persuade the European Commission to exempt public sector spin-outs from normal procurement rules and has issued a briefing note asking others to back its plans.

A consultation on the European Commission green paper on the modernisation of EU public procurement policy closed earlier this year. It asked questions about subjects including how the commission could improve the business environment, particularly for small and medium-sized enterprises, how it could promote greener public procurement practices and how it could make it easier for businesses to innovate.

In its response, the government said one of its four main priorities was to ensure that employee-led spin-outs would be entitled to a period of time to gain experience running their services, before being forced into full competition.

In a briefing note, issued last month, the Cabinet Office said it would be "actively influencing the commission, other EU member states and the European Parliament" in the run-up to the publication of the revised directives, and invited others interested in the area "to help maximise our influence through any engagement you may have with these bodies and other stakeholders."

Stephen Lloyd, head of charity and social enterprise at the law firm Bates Wells and Braithwaite, said that EU procurement rules were currently based on the concept that public service provision was done either by the state or the private sector.

"We want to move services out of the state and into a social economy, and the rules are not set up to support that," he said. "If you set up a new social enterprise to deliver something that was previously delivered by the state, and it has to compete with big business from day one, it won’t work.

"There needs to be a transition process. These organisations need to be protected. The government needs the agreement of the EU that it’s allowed to do so, and this is its opportunity to get it."

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