- £125m pledged towards supporting local businesses and supply chains this year
- A further £1.17bn anticipated across the next three to five years
- Part of an unprecedented drive to boost the capital’s social and economic recovery from the pandemic
The Mayor of London, Sadiq Khan, has today announced that some of London’s most well-known organisations have committed to supporting the city’s recovery from the pandemic by spending more than £1.3bn over the next five years on contracts with small businesses in the capital.
By implementing changes to their budgets and suppliers, 16 of London’s biggest organisations - known collectively as The Anchor Institutions’ Network - have pledged to spend up to 30 per cent of their annual procurement on small businesses based in the capital. Members include the Greater London Authority, NHS London, TfL, the Metropolitan Police and the University of London, and the strategy forms part of an unprecedented initiative to accelerate London’s social and economic recovery from the pandemic.
£125m has already been pledged towards supporting micro and small businesses, voluntary, community and social enterprises and local supply chains in 2022, with an additional £1.17bn anticipated across the next three to five years.
Economic data shows that when London succeeds, the UK succeeds and vice versa(1). This commitment to purchasing more goods and services from local businesses and SMEs is part of a wider, coordinated effort by the Network, to create jobs and growth, and reduce inequalities.
The Anchor Institutions Network represent a cross-section of public sector, higher education, cultural, faith-based and private industry bodies, who have committed to helping Londoners into good work, empowering young people to flourish, and supporting the capital’s net-zero targets. The Mayor united the organisations last year as part of his commitment to creating a fairer, cleaner, greener city as London recovers from the pandemic. In March 2021 participating Anchor Institutions signed a Charter, pledging to use their procurement budgets, recruitment and estate management to support Londoners most impacted by the coronavirus pandemic and the subsequent economic fallout.
This is the first time that community wealth-building work has been undertaken in London on such a major scale. Since being convened by the Mayor last year, the organisations have gone through a detailed and technical process to work out how complex procurement and recruitment practices could be refocused in order to help drive London's recovery and invest money and opportunities into the communities most in need to financial support. While London’s economy is showing signs of recovery, the unemployment rate remained 0.7 percentage points above pre-pandemic levels in December. The number of people claiming unemployment-related benefits was also around 150,000 higher (81 per cent) in January 2022 than in March 2020(2).
The Greater London Authority has pledged 30 per cent of its annual direct and indirect spend to diverse* London-based micro and small businesses and charities, and voluntary, community and social enterprises, equating to £35.4m this year alone.
The Mayor of London, Sadiq Khan, said: “I have been working side-by-side with some of London’s largest institutions in this unprecedented partnership, ensuring that the collective impact of our procurement, hiring and estate decisions will contribute directly towards reducing poverty and inequality in our city.
“I want to thank the organisations involved for their commitment to serving our great city and I hope that the leadership shown by the Metropolitan Police, TfL, NHS London, the University of London and all the other Anchor Institutions will encourage other organisations to join us in setting ambitious targets to help support a fair, green recovery from the pandemic.”
NHS London is pledging to increase its annual spend with SMEs in London from 9 per cent to 20 per cent, representing an uplift of over £312m to micro and small businesses, voluntary, community and social enterprises by the end of 2023.
Lizzie Smith, Health Education England (HEE) London Regional Director and SRO for the NHS London Anchor programme said: “The NHS has an important role to play across the capital, not only in continuing the high-quality care of our patients, but also as a large employer and institution. Through the services and products that we commission, the food and supplies we order, and how we maintain our hospitals, we are able to make a real difference to the lives of people living and working in London.
“NHS London is proud to be part of the London Anchor programme - we are committed to bringing social value, reducing inequalities and helping the London economy flourish again.”
The Metropolitan Police has pledged to spend £84m of its total goods and services purchased on London-based micro, small, diverse and Voluntary Community and Social Enterprise businesses this year, scaling up to an estimated £168m by 2025. The Met is also one of the first public sector bodies to sign up to Minority Supplier Development UK (MSDUK) to verify diversity of business ownership and the first public sector organisation globally to divert value from its commercial arrangements to community organisations via Givewith, a social value impact capability.
TfL’s ambition will be to purchase 20 per cent of goods and services from small and medium enterprises (SMEs), either directly or indirectly from within its vast supply chain. This ambition will need further work to understand the constraints, deliver and effectively measure.
The London Anchor Institutions Charter is a key initiative of the London Recovery Board, chaired jointly by the Mayor of London, Sadiq Khan, and the Chair of London Councils, Councillor Georgia Gould, which brings together leaders from organisations across London’s government, business, and civil society.
The initiative in London builds on anchor institution work undertaken in various cities in the US and UK, where large locally rooted organisations are working together to take radical steps to address inequality and boost their local economies.
Notes to editors
For further details on the London Anchor Institution Network and the signatories of the Anchor Institutions Charter, visit: www.anchors.london
For further details on the London Anchor Institution Charter: https://www.london.gov.uk/sites/default/files/26.03.21_anchor_institutions_charter.pdf
Further details on the London Recovery programme as a whole can be viewed here: https://www.london.gov.uk/coronavirus/londons-recovery-coronavirus-crisis
Breakdown of the £1.3bn figure
The figure of London’s Anchor Institutions spending more than £1.3bn over the next five years on contracts with small businesses in the capital, has been worked out based on:
£124m pledged towards supporting local businesses and supply chains this year (2022/23):
- £84m by the Metropolitan Police
- £35.4 by the GLA
- £5m by the University of London
A further £1.17bn anticipated across the next five years.
a. £880m from NHS across next five years (2022 – 2027)
b. £294m from Metropolitan Police across 2023/24 and 2024/25
£610,000 in contracts already reserved for diverse SMEs this year (2022/23):
a. Approximately £470,000 sourced from TfL’s reserved contracts
b. £75,000 sourced from OPDC’s reserved contracts
c. £65,000 sourced from Greater London Authority reserved contracts
*Definition of businesses: members of the network have publicly pledged to buy more from small and diverse local businesses and social enterprises, with numeric targets for the next 3-5 years, including reserving contracts for London-based micro, SME, and Voluntary, Community and Social Enterprises (VCSEs):
A micro business has 0-9 employees; a small business has 10-49 employees, and an SME has up to 250 employees.
A VCSE (voluntary, community and social enterprise) describes any organisation that works with social purpose and that generates revenue through trading and reinvesting any surplus back into the business or the community it serves. It is a type of organisation, not a legal form.
The GLA uses the term minority-led/diverse enterprise for a business that has a majority (51% or more) ownership, or a majority of their senior management team, comprising individuals from Black, Asian and minority ethnic groups, women, people with disabilities, lesbian, gay, bisexual, trans-person (LGBTQ+) or faith groups.
1. London and the UK – a declaration of interdependence:
2. London Labour Market Update – February 2021: https://data.london.gov.uk/dataset/gla-economics-covid-19-labour-market-analysis