Some commentators have described Chris White MP’s call for all public sector procurement to include an element of social value as a utopian objective while others argue that during a period of austerity, the only determinant for selecting contracts and providers should be the lowest price.
I am with White on this one: public services have always, and should always, add public value which goes beyond the immediate service itself.
This public value may be exemplified in many ways, including:
- Good employment practices.
- Employing local people, especially from disadvantaged groups.
- Paying the “living wage”.
- Developing talent and providing staff development programmes.
- Purchasing local supplies.
- Involving local SME companies and/or third sector organisations in the supply chain or as joint venture partners.
- Meeting sustainability targets.
- Providers practicing the highest standards of governance and probity.
Local authorities such as Blackburn with Darwen (local employment, diversity and local supply targets), the GLA and London Mayor (living wage) and others have typically included social and local economic goals in their contractual arrangements. It is usually a matter of political choice and drive.
Evidence going back to compulsory competitive tendering in the 1980s shows that when the public sector (and local government in particular) procures on price alone, consequences can include poor service performance and failed contracts. And all too often, the latter leads to the negotiation of new but more expensive contracts and client management costs.
Many in the public sector are considering moving towards more outcome-based contracts with payments by results. The underlying purpose of such an approach is to limit the restrictions and requirements placed on the provider so they can innovate and maximise outcomes for service users and the wider community, and be more responsive.
Undoubtedly, it can be legally difficult and expensive to contract for many of the outcomes that the community desires because of the inability of the provider to control the factors that influence them.
That said, it should still be possible to hold a provider (from whatever sector) to account for outputs that are directly linked and contribute to the achievement of the sought after outcomes. White’s approach lends itself to this form of procurement. Indeed, it should also be possible to set contracted targets which address social goals.
The challenge of measuring a vaguer concept of “social value” is more complex. Any measures have to be achievable and understood by commissioners, providers, staff, service users and the wider community. In many cases, it will be possible to put a pecuniary value on these targets which can be used to demonstrate value for money.
Value is what the community has authorised through consultative and democratic processes – it does not, and must not mean, the cheapest. Buy a cheap t-shirt only to find it falls apart when it’s put in the washing machine – and still worse to discover that it was made by sweated child labour. When we buy public services, we need to maintain values, morals and economic sense.
A local authority should always start with a strategic commissioning process which engages stakeholders and identifies and authorises the outcomes being sought and what a provider will deliver, including any wider public value.
Provision may be sourced from any sector and from large or small providers – and large ones may be required to involve smaller ones to specified standards and based on equality. The local authority is ultimately accountable so the whole must be transparent and publically accessible.
Localism also offers authorities the opportunity to empower service users and communities to find solutions for themselves. Ironically, and to the surprise of many central control bureaucrats, early evidence from direct payments for personal care suggests that users spend less than professionals in return for greater satisfaction from the service.
Some services lend themselves to large-scale shared provision to secure economies of scale and others to local community or individual commissioning and delivery.
The government’s aim to make public sector contracting more transparent and accountable can only be strengthened by White’s bill. Council, and other public sector leaders should be mindful of the dangers of short-term expediency, and not allow the immediate pressures of the expenditure cuts to drive them away from public value.