Squandering in public procurement: uncontested seats and one-party dominated councils in England lack control of corruptionOctober 9th, 2015 Posted by Geraldine Endrizzi Uncategorised No Comment yet
In the UK where ‘First-Past-the-Post’ electoral rules are the norm in local elections, with the exception of Scotland and Northern Ireland, lack of local electoral accountability poses a high risk to government integrity as voters may not be able to elect an alternative to the corrupt incumbent. The persistence of uncontested seats and one-party dominated councils at the local level is a cause for concern across England in terms of quality of public services, value for money, and government responsiveness to citizen needs.
DIGIWHIST project coordinator Mihály Fazekas published last week a report based on big data titled ‘The Cost of One-Party Councils: Lack of Electoral Accountability and Public Procurement Corruption’ for the UK based Electoral Reform Society. Mihály Fazekas investigates the impact of weak electoral accountability on corruption in public procurement, explored at the local level in England (excluding London). In this context, weak electoral accountability at local elections is understood 1) if a borough is having a large share of uncontested seats (i.e. at least 10% of seats) or 2) if a council is being overwhelmingly controlled by the same party for 10 years or more (i.e. same party controlling more than 2/3 of seats without interruption).
Fazekas uses administrative data on electoral outcomes as well as on public procurement tendering procedures from 2009-2013 for 132,000 public procurement contracts. It employs an innovative measure of corruption risks in public procurement capturing a set of ‘red flags’ such as single bid submissions or shortened lengths of time between advertisement and submission deadline, signaling the likely steering of government contracts to a favoured bidder.
Based on the comparison of matching contracts, the findings suggest that weak electoral accountability may lead to substantially higher corruption risks and lower price savings in English local councils. Councils of weak electoral accountability are roughly 50% higher corruption risk than their competitive counterparts which also coincides with foregone savings of 1-4% of contract value. The foregone savings by councils with weak electoral accountability roughly amount to £2.6bn annually.
This is substantial given the total £45bn annual spending estimate.
Un-matched and Matched contract samples price savings Comparisons: one-party dominated and competitive councils compared, 2009-2013, England
Source: European Union’s Tenders Electronic Daily
The figure above shows that median differences between matched contracts (matching serves to correct the varying spending composition among different locality types e.g. contract value or main product group of purchase) of different council types in terms of cost savings achieved in procurement tenders are substantial: 6.2% versus only 2.2%. The results on the local level are very diverse though as not in every locality there is such a negative effect.
The Electoral Reform Society states: “The £2.6bn potential wastage is a damning indictment of an electoral system that gives huge artificial majorities to parties and undermines scrutiny. This kind of waste would be unjustifiable at the best of times. But during a period of austerity it is simply astonishing.”
Based on these findings, it is very commendable that European Commission decided that indicators such as single bidding and lack of publishing the call for tenders constitute key aspects of public procurement performance and have included them into its procurement scorecard.