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Spinning into social value

Source: Public Sector Executive Jan/Feb 2012

Dom Potter, director of the Transition Institute, explains the advantages that spin-out companies from the public sector have over alternative providers.

Two weeks ago, a Private Members’ Bill called the Public Services (Social Value) Bill passed through the second reading stage on its way through the House of Lords. Having progressed through the House of Commons already, it is now just a few more stages away from being given Royal Assent and passed into law.

If you work with or deliver public services, the chances are you might not have paid much attention to this Bill on its way through Parliament. For all of us interested in the future of our public services, however, this Bill is likely to have a profound impact on our work for years to come.

The Bill aims to reform the commissioning process by public sector commissioners to consider how they can maximise the ‘social value’ – the social, economic and environmental wellbeing – of local areas through public procurement. The changes in the Bill, should they come into full force, will have a profound impact on the commissioning and procurement of public services in the decades ahead. It will shift the focus from the bottom-line price or cost of a service towards the overall value of the outcomes delivered.

The process of achieving the desired outcomes will also be taken into account – in other words, the awarding of public service contracts will no longer simply focus on whether you deliver the required results, but how you get there. This potentially represents a shift from payment by results, and offers a model based upon social value that is more akin to ‘payment by process and product’.

The Transition Institute (TI), is at the forefront of this new wave of public services reform, and is starting to unpick the issues and complexities involved in this shift. The TI was launched in May 2011 to support the emergence of public sector staff setting up – spinning-out – independent organisations to deliver public services. Often staff spinout their services not simply to reduce costs but to also protect the rich history of impact they have delivered for local communities and to gain the autonomy from short-term political machinations they are subject to within a local authority for instance. Spin-outs quite simply protect existing social value and build upon it in a way that alternative providers aren’t able to.

The TI recently published ‘Social Value Ethos’ on this subject, with leading practitioners alongside Nick Hurd, Minister for Civil Society, and Sir Stephen Bubb, CEO of ACEVO and TI board member. Aimed at practitioners, the publication is a blend of unpicking the rationale and opportunity behind ‘social value spin-outs’ and a exploration of practical, applicable change management models which practitioners can utilise to embed a positive, enthused ethos within the fabric of their new organisations.

What is for certain is that the architecture of public services in the UK is in transition. From the National Health Service to local authorities, schools and libraries, our public service institutions are being remodelled. This transition is a response to fundamental challenges we are facing: growing demands placed upon local and central government by an ageing society and climate change, or persistent challenges like poverty, reoffending and families in crisis, are being amplified by the wider economic climate and the subsequent downward pressures on budgets.

As the changes in our social fabric and economic context results in wave after wave of reform of our public services, we may just have stumbled upon a way to blend effective market-making in public services with a fundamental commitment to the principles of a truly ‘public’ service.

There is a long way to go in ensuring that spin-out organisations have a clear and supportive path ahead of them to competitively go on delivering public services; but the potential for these organisations to leave behind the staid debate of ‘public vs private’ is beginning to be realised.

These spin-outs are pointing the way on how to deliver services that maximise social value for communities. Within organisations who have spun out or are in the process of spinning out of the public sector – such as City Healthcare Partnership in Hull, NAViGO in Grimsby and Kensington and Chelsea Youth Services – there is an inescapable feeling of liberation and enthusiasm, due in part to a sense of empowerment and control that accompanies new governance and ownerships structures.

It is the public service ethos and then some; it’s a social value ethos.

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