This article is a pre-read for our 2024 Autumn Budget Report, which will be released to the general public on Tuesday, November 5th.

Introduction

In July 2024, HM Treasury released its first 2023-24 outrun estimate, highlighting overarching trends and changes in public spending. That same month, Rachel Reeves delivered her first statement as Chancellor, confirming that the budget would be released on the 30th of October, 2024. This marks the first Labour budget since 2010 and has promised to bring a fresh approach to economic policy and public sector spending.

For suppliers working with the public sector, understanding the drivers behind the projected £21.9 billion overspending announced in the audit is critical, as it signals tighter government budgets. Factors such as inflation, public sector pay rises, and global events, like the invasion of Ukraine, are pushing procurement priorities towards cost-saving and efficiency.

While the UK public sector moves toward greater digital transformation, sustainability, and innovation, suppliers should focus on innovative solutions that align with government objectives, such as digital transformation, cost-efficiency, and sustainability. Demonstrating a clear return on investment and establishing meaningful connections with stakeholders through deep research and engagement before tenders go live will be crucial for securing contracts in this highly competitive landscape. 

This article provides a first look at the Autumn Budget, shares a snapshot of public procurement trends based on past government publications and recent news, and provides advice for suppliers keen to finish the year strong.

To secure public sector contracts and stay updated on the latest procurement trends revealed in the Autumn Budget, sign up to Stotles today.

What is the potential impact on suppliers?

Regarding the audit’s identified savings of £5.5 billion in 2024-25, rising to £8.1 billion in 2025-26, suppliers, particularly those offering consultancy, communications, or non-essential services, should expect a more competitive and constrained market. The Government’s focus on cost-effectiveness, efficiency, and technology-driven reforms will mean heightened competition, with contracts favouring suppliers who can demonstrate innovation and adaptability.

Looking ahead to the budget, departmental budgets for 2025-26 will be announced alongside the Office for Budget Responsibility (OBR) forecast. However, the immediate savings identified reduce the pressure from £21.9 billion to £16.4 billion in 2024-25. In short, navigating tighter budgets and demonstrating substantial value for money will be essential for suppliers to remain competitive in this increasingly scrutinised procurement landscape.

This budget aims to restore economic stability by tightening public spending controls through a three-step plan:

Government budgets directly shape supplier procurement strategies by setting new priorities and unlocking funding for various departments. For suppliers, particularly those in sectors like technology, infrastructure, and healthcare, understanding these priorities is essential to align their offerings and capitalise on emerging opportunities.

Understanding the critical spending areas

As part of this budget, the new Government will announce their departmental allocations, which, in a nutshell, will determine the opportunities available for suppliers for the next financial year, 2025-26. When the budget is announced on the 30th of October, the Labour Party will have three key pressures they will seek to provide a roadmap for:

The UK Government’s spending is divided into two categories. Firstly, the Departmental Expenditure Limits (DELs) outline spending controlled by government departments for public services and is the key focus of those following public sector procurement. This is further broken down into Resource DEL (RDEL), the day-to-day operational costs like wages and consumables, and Capital DEL (CDEL), which is the investment in assets such as buildings and infrastructure. Separate from DELs, the Annually Managed Expenditure (AME) is for more unpredictable, demand-led spending, including pensions, social security, and debt interest.

Looking back on the Spring Budget 2024’s RDELs, health and social care had the largest allocation of 178.5 billion, with 92% of this going towards NHS England, indicating the continued investment in healthcare infrastructure, services and technology. 

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Following health and social care, education was allocated £81.9 billion and £35 billion to Defence. See the complete breakdown of Spring Budget 2024 Resource Departmental Expenditure Limits (RDELs) and Capital Departmental Expenditure Limits (CDELs) below.

There has been a lot of focus on the NHS from a procurement perspective, with the NHS Integrated Care Systems revealing their 2024-25 budget earlier this year. Read more here.

The Government’s Capital DEL, which is budget allocation specifically for longer-term projects and growth, stands at £110.7 billion in 2023-24 and showcases how capital investments create opportunities for businesses supplying infrastructure, construction, and technology services. Major capital projects in Transport (£22.1 billion), Defence (£19.2 billion), Science, Innovation and Technology (£12.6 billion), and Health and Social Care (£11 billion) signalled opportunities for suppliers involved in these areas.

Spotlight on Healthcare

The 2023 Autumn Statement and 2024 Spring Budget highlighted significant supplier procurement opportunities, particularly across healthcare.

In the Autumn Statement, the Government committed £162.5 billion to the NHS for 2024-25, focusing on urgent care, elective backlogs, and primary care recovery. An additional £200 million was allocated to boost NHS winter resilience, and £2.4 billion was invested in the NHS Long Term Workforce Plan, indicating future training and workforce development contracts. This provided suppliers across these business areas an excellent opportunity to capitalise on the Government’s focus on healthcare.

For example, using Stotles’ contract data, we can see that supplier BJSS won a contract in November 2023 focused on developing, maintaining, and supporting the NHS Innovation Service, including backlog development and processing support tickets. This contract is valued at £1.5m and expires in November 2024. Click here to view this contract in more detail.

Similarly, for healthcare, in the Spring Budget 2024, £3.4 billion was earmarked for NHS technology and digital transformation, providing procurement prospects in AI, electronic records, and equipment upgrades.

For example, IQVia won a £28m contract to deliver robust privacy protection for safe data access and use across various NHS data platforms. This contract was awarded in November 2023 also and will expire in February 2027. Click here to view this contract in more detail.

Following the review of the departmental budget allocations and the conservative party’s plans for the 2024-25 period, most departments are expected to remain flat or face cuts, except for the local Government, which predicted a slight increase. However, new data from the Office for National Statistics (ONS) has confirmed that there was an £11.5 billion overspend in the first half of this financial year, mainly due to public sector pay rises and higher running costs, indicating a gross miscalculation in the Spring 2024 budget. This miscalculation and mismanagement of public funds is a core driver of Chancellor Reeves’ sentiment in the 2024 Autumn Budget.

Next steps: Preparing for future opportunities

This autumn budget will clarify the Government’s priorities for the new financial year. Still, it won’t change how the public sector procurement system operates or the strategies employed to generate success for your business. Building a pipeline and pre-engaging with prospects is a constant challenge that Stotles aims to help solve. 

For more information on how to kick-start your public sector sales pipeline, sign up for a free account with Stotles today