Economy and Infrastructure

Making the public pound count

Rt Hon Hazel Blears, chair of Social Investment Business and a leading member of the National Advisory Board for Global Impact Investment, discusses the importance of achieving social, economic and environmental impact through procurement. 

Sometimes it’s not the great tones of lengthy legislation that make the biggest changes to our lives and communities but the simple ideas, based on common sense and practicality that are easy to implement, low cost and relevant to people everywhere. In my time in Parliament one of these simple ideas emerged four years ago when I worked with Social Enterprise UK, and colleagues in all parties, to help take the Public Services Social Value Act through the labyrinthine legislative jungle to become Law.

The idea is simple – it requires those commissioning public services to consider social, economic and environmental impact as well as cost when deciding how to spend taxpayer’s money, locally and nationally.

It is small but powerful legislation. It is common sense and practical. Who doesn’t want to squeeze every penny of value from diminishing resources to try to improve jobs, services, and the environment in which we live?

It is not just low cost but can also help to save money by achieving a range of improvements over and above the particular service being commissioned, and it is increasingly easy to implement as more local authorities and practitioners become familiar with the results it can produce.

Four years on from the passing of the Act its principles have now been adopted by 75% of local authorities and there are some fantastic pioneering areas of the country who have enthusiastically led the way in developing a body of knowledge and practice to support this way of working.

In Greater Manchester, London, Birmingham and Liverpool achieving social, economic and environmental impact through procurement is now firmly embedded in their policies and is being used to achieve extra benefits in a wide range of areas from construction of new homes and public buildings, to the provision of children’s services, support for older people and increasingly in the planning process.

But it’s not just in the big cities with mayors in the driving seat that have pushed for local spend and local jobs and apprenticeships through procurement, places like Kent, Oxford and Somerset have also seen how they can get a bigger benefit for their communities if they are smarter about their public spending decisions.

As this approach to procurement develops it is interesting to see how the commercial market is reacting. Many companies are beginning to recognise that evidencing social and economic impact will be increasingly necessary if they are to win public contracts and to gain a competitive advantage. Companies like Fujitsu, Johnson & Johnson, Sodexo and Wates Construction have been active in this area for some time and, as well as providing social value through their own activities, are also joining with social and community organisations in their supply chains to help them deliver impact on the ground.

The area of greatest challenge is in central government, which has been slower to take up the opportunities offered by social value, to maximise the impact of the £200bn annual spend on procurement by departments and agencies. 

The NHS could make a significant impact on the health of those they support through services if they were to employ more people with physical and mental health issues as employment and independence are clearly key to good health outcomes. Some local trusts have embraced social value in their procurement but the centre has not yet systematically promoted this approach.

Defence procurement is huge and the problems of ex-service personnel in finding jobs and settling into post-service life are well known. Using procurement to specify opportunities for those transitioning into civilian life would make a significant difference to those who have served, as well as saving costs in unemployment and support services.

These are just a couple of examples, but if this approach is promoted from the centre across all government departments it would improve thousands of lives and save money. We can’t afford not to do it.

I am hopeful, having recently met with Malcolm Harrison, the new Head of the Crown Commercial Service, that the mindset in central government is changing. I know he understands and supports the principles of social value and impact and is keen to explore the opportunities that could be gained through government’s framework contracts.

Challenges remain if we are to mainstream social value. Central Government needs to step up the pace to shape the market and drive Responsible Business, Local Government needs to continue to embed Social Value in Business as Usual and the massive investment in new infrastructure programmes like HS2 and the new Nuclear Plants must embrace it too.

There are two important opportunities coming up to move ‘Procurement with Purpose’ forward. On 18 September, the Global Advisory Group on Impact Investing will publish its UK report, where it will recommend embedding social value into every public tender decision aiming for a minimum weighting of at least 20%. It’s an ambitious target but achievable with local and central government working together.

On 14 November, the National Social Value Conference in Birmingham will bring together commissioners, social and community enterprises, corporates and measurement experts to highlight achievements so far and to agree on future action.

Social Value is a great opportunity to spend taxpayers’ money wisely and well – let’s not waste it.

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