Using public finances in a more socially responsible manner

27 Oct 17

Brexit brings with it an opportunity to embed social value into public procurement practices, says Matthew Jackson of the Centre for Local Economic Strategies

The introduction of the Public Services (Social Value) Act in 2012 presented an opportunity to really re-think the way we undertake procurement in England. It specifically sought to encourage public authorities to consider issues beyond price and quality in the design of procurements and decision-making processes to also include those of social and environmental concern.

Some public authorities have fully bought into the notion of social value, considering it across contracts of all types and values, and embedding it across all stages of the procurement cycle from the design of the service (commissioning) through to monitoring impact. Indeed, the work of my organisation, the Centre for Local Economic Strategies (CLES) with Manchester City Council has seen amongst other things, social value making up 20% of the contract award criteria.

However, for many public authorities, social value has not been as actively embedded into procurement activities. This is primarily in my mind a result of three factors. First, the act is not suitably bold enough and uses words such as ‘encouraging consideration of social value’ rather than enforcing it. Second, the culture of procurement within public authorities has increasingly become about efficiency savings rather than also reflecting upon effectiveness and the way in which procurement can be used as a lever to address wider local economic, social and environmental challenges. And third, and historically, the procurement directives of the European Union have added to the bureaucratic and rigid nature of public procurement, with social value often an afterthought.

Times are changing, however. The EU Procurement Directives of 2014 introduced three very important phrases in relation to public procurement. They talk of the importance of flexibility in the process of procurement, they talk about the need to increase the amount of procurement spend with SMEs, and they talk about using procurement strategically to achieve wider social and environmental goals.

In addition, an increasing number of places are beginning to recognise the importance of progressive approaches to public procurement. They recognise that public funding is reducing through austerity; they recognise that regeneration funding has virtually come to an end; and they recognise that places are facing an increasing number of social challenges including rising inequality and poverty. Procurement spend and the way in which we undertake procurement is effectively becoming an antidote to some of these challenges.

All of which brings us neatly to what happens to public procurement post-Brexit. I have argued in CLES’s most recent publication Opportunities for Public Procurement Post-Brexit that Brexit presents an opportunity to further progress the way in which we utilise procurement in the UK as a strategic lever. We already have a solid and grounded policy framework in place through the EU Directives and the Social Value Act. However, we need to go much further if public finances are truly to be used in a socially responsible manner through procurement.

In our publication we talk about two tiers of proposed policy evolution. At the central level, there needs to be a ‘beefed up’ Public Services (Social Value) Act which is applicable to both local public procurers and those in central government. This legislation also needs to ensure that social value is not a consideration in procurement but a requirement. The legislation also has to be accompanied by a policy framework, so that principles of social value are also embedded into central government procurements, something that does not currently happen.

At the local level, the legislation and associated policy framework needs to be applicable to and implemented into procurement activity at the combined authority and local authority geographical levels. It has to be used as part of each of the stages of the cycle of procurement from strategy to commissioning to tendering to decision-making to delivery to monitoring.

Only once we have progressive procurement legislation, policy, and practice will the utilisation of public finances become more socially responsible.

  • Matthew Jackson
    Matthew Jackson

    Matthew Jackson is deputy chief executive of the Centre for Local Economic Strategies (CLES)

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