The Welsh Government wants more public spending to support Welsh businesses and communities. But supplier location alone cannot tell us whether procurement is creating lasting economic value. Its promised measure of Welsh economic value may prove more consequential.
Welsh public bodies spend more than £11 billion each year procuring goods and services. The Welsh Government’s Programme for Government 2026–2030 commits to increasing the amount spent with Wales-based suppliers towards 70%, using public procurement as a driver of economic growth. It also promises “a new measure of Welsh economic value from public procurement” to maximise the economic and social benefits of that spending.
The 70% commitment will attract the headlines. But the second commitment may matter more.
Supplier location is relatively easy to count. It is much harder, and potentially much more useful, to understand how public spending supports Welsh jobs, skills, resilient supply chains and the transition to a lower-carbon economy. The design of the new measure will help determine whether the ambition changes the Welsh economy or primarily changes the way spending is classified.
Procurement as an economic development tool
The commitment is significant because it treats procurement as an economic development tool, rather than only an administrative function. For most public bodies, procurement is still judged primarily through process compliance and price. The Programme asks it to contribute more deliberately to business growth, fair work, community wealth and environmental sustainability.
This sits within a wider economic argument. The government says it is “committed to generating wealth and retaining it within our communities” (p. 21). It pairs the procurement ambition with a Fair Work First approach to grants, loans, and contracts, a reformed Development Bank of Wales, and support for co-operatives and social businesses. Procurement is therefore one of the largest direct economic levers available to the Welsh Government, and ones the Welsh Government can pull without new powers from Westminster. It is not just about how much money reaches suppliers with a Welsh address but what value it can leave behind.
The supporting architecture is also stronger. The Procurement Act 2023 and associated Welsh regulations came into force in February 2025. Most relevant provisions of the Social Partnership and Public Procurement (Wales) Act 2023 followed on 25 March 2026, with further reporting provisions commencing on 1 April 2026. These reforms create an opportunity to generate more consistent information about procurement outcomes. The question is whether the system will collect what is easiest to report or the evidence decision-makers need.
Why supplier location is not enough
There is a good case for a simple headline figure. A visible target gives procurement teams a shared direction and may encourage buyers to examine Welsh markets, make contracts more accessible to smaller firms and challenge habitual reliance on national suppliers.
However, the figure will only be as meaningful as the definition behind it. If a Wales-based supplier is identified primarily through a registered or trading address, the measure will tell us where an invoice comes from. It will not necessarily tell us where the work is undertaken or where value is retained.
Consider three possible cases:
- A Welsh-registered distributor supplies imported equipment. The expenditure may count towards the target even though most manufacturing, design and employment take place elsewhere.
- A national contractor operates a branch or depot in Wales, while profits, specialist functions and much of its supply chain remain outside Wales.
- A Welsh SME undertakes substantial work as a subcontractor to a non-Welsh prime contractor, but its contribution is invisible if only first-tier expenditure is measured.
In each case, supplier location provides useful information, but not a complete account of Welsh economic value. The percentage could rise without more Welsh jobs, skills or productive capacity, while overlooking value created deeper within a supply chain.
The Programme also does not yet specify the baseline, the precise scope of the measure or how progress towards 70% will be assessed across very different categories of expenditure. This is understandable at this stage, but it makes development of the accompanying value measure particularly important, because that measure will be what shoes whether the ambition is working.
Delivery will vary between markets
Moving towards 70% will be more achievable in some markets than others. Wales has established or developing capacity in construction, food, care and some professional services. In areas such as specialist medical equipment, pharmaceuticals and IT hardware, the opportunity may instead lie in installation, maintenance, repair, software or subcontracting. Category-level analysis would show where suppliers could win more work, where public demand could stimulate capacity and where localisation is currently unrealistic.
Public bodies must also work within procurement law, value-for-money requirements and the UK’s international obligations. They cannot simply favour a bidder because it is Welsh. More defensible approaches include dividing requirements into appropriate lots, publishing pipelines early, using proportionate selection requirements, engaging suppliers before competitions and designing contracts around outcomes.
These interventions require commercial capability and market development. Without supplier engagement and capacity-building, a target could reduce competition or concentrate spending among established firms. Measuring it will also require consistent spend classification, reliable supplier information and, for major contracts, visibility beyond the prime contractor. Otherwise, apparently comparable figures may measure different things.
What should a measure of Welsh economic value include?
The new measure should complement the supplier-location percentage by asking a different question: what does this expenditure leave behind in Wales?
An illustrative framework could combine six dimensions:
| Dimension | What it should help show | Illustrative indicators |
| Value retained | How much contract value reaches Welsh businesses and workers, including beyond the prime contractor | Proportion of delivery undertaken in Wales; expenditure with Welsh tier-two and tier-three suppliers |
| Employment | Whether contracts create or sustain employment in Wales | Jobs created or sustained; geographic distribution; entry routes for people previously out of work |
| Fair work | Whether employment supported through contracts meets recognised standards | Real Living Wage coverage; secure employment; worker voice |
| Skills and capability | Whether procurement strengthens long-term productive capacity | Apprenticeships, accredited training, progression and supplier investment |
| Supply-chain resilience | Whether Welsh markets become deeper, more competitive and less exposed to disruption | Number and diversity of capable suppliers; SME participation; supplier concentration |
| Carbon and circularity | Whether expenditure reduces emissions and keeps materials in productive use | Supply-chain emissions; embodied carbon; repair, reuse and recycled content |
The environmental dimension matters because local does not automatically mean low-carbon. Transport distance is only one part of a product or service’s footprint. Energy use, materials, production methods and durability can be far more significant. A measure that rewards supplier location while ignoring carbon could work against Wales’s wider net-zero and circular-economy objectives.
Reporting must remain proportionate. A common core of indicators could apply across procurement, with more detailed evidence reserved for larger contracts and categories where the potential impact justifies it.
Welsh timber offers a practical model
The Programme already includes an example of this broader approach. It commits to developing the Welsh timber supply chain, using public procurement to stimulate demand while supporting innovation, business growth and resilience.
Public demand can give growers, processors and manufacturers confidence to invest, supporting employment, skills and value retention. Where sustainably sourced timber replaces more carbon-intensive materials, it can also reduce embodied emissions. A value framework could capture these effects, making timber a useful model for aligning procurement, industrial development and decarbonisation elsewhere.
From target to results
Five practical steps would give the ambition a stronger chance of changing outcomes:
- Establish a credible baseline. Publish the current share of relevant expenditure with Wales-based suppliers using an agreed definition, while making limitations in the data transparent.
- Develop trajectories by category. Identify where Welsh supply is already strong, where it could grow and where opportunities sit deeper in the supply chain.
- Invest in supplier development before contracts are advertised. Publish pipelines, engage the market and help SMEs, social enterprises and co-operatives understand and prepare for future demand.
- Create one proportionate data standard. Agree common definitions and a small core of indicators that can support organisational reporting and national analysis without duplicating requests to suppliers.
- Evaluate outcomes, not only expenditure. Monitoring can show whether a percentage changed. Evaluation is needed to understand whether procurement caused additional jobs, skills, investment, resilience or emissions reductions — and why some approaches worked better than others.
Much of this does not require further legislative powers. It requires consistent definitions, usable data, commercial capability and sustained collaboration between government, public bodies and suppliers.
Judge the value, not only the postcode
The Welsh Government is right to treat more than £11 billion of annual procurement as an economic development opportunity. A clear target can focus attention and give Welsh suppliers a stronger route into public markets. But the percentage is a means rather than the end. Success should be judged by what expenditure leaves behind: better jobs, stronger skills, more resilient supply chains and lower environmental impacts.
The proposed measure of Welsh economic value is where that distinction will be made. If it combines supplier location with evidence about outcomes, it could turn a political commitment into a practical framework for long-term economic development. If it relies too heavily on postcode-based spend, it risks rewarding changes in classification rather than changes in the economy.
Getting the measure right will require supplier engagement, consistent data and meaningful evaluation. Those are practical foundations that public bodies and their partners can begin building now.
Miller Research supports public bodies across Wales and the UK with sustainable procurement, supply-chain decarbonisation, research and evaluation. If your organisation is considering how to understand and increase the value created through its procurement, we would be glad to talk.
