Maximising social value to build back better
Despite initial talk of a “bounce-back”, with Covid-19 we now face unprecedented economic and social crises. Economic recovery looks set to be a long and painful process, characterised by business failure, huge levels of unemployment and social hardship. In CLES’ policy provocation, Restoring public values: the role of public procurement, we explore the role for public values in public procurement in the light of Covid-19 and proposes a way forward that considers how the spending of public money can be harnessed to maximise its social value and deliver greater social, economic and environmental justice.
Whilst there is now talk of a UK national stimulus package, we must also redouble our efforts to ensure that every single pound of existing and new UK public money is used wisely and well. Public money should flow through our economy to maximise social value in the form of Jobs, opportunities for local enterprises, and advancing zero carbon objectives.
However, the expected economic and social multiplier accruing from this stimulus will be weak, because social value legislation in England is deeply flawed. Sadly, an emphasis on price before quality, has meant that service user need and wider social value has been neglected. In this, increasingly, social value has become a tick in the box exercise – something that is narrowly applied to the tendering process.
As we attempt to recover from Covid-19, we must seek to equip the local and national state with an inbuilt resilience and adequate contingency to tackle the other crises it has for so long ignored: poverty, social care, housing and – most significantly of all – the climate emergency. Fundamental to this aim is a firm re-commitment to the notion that public expenditure must be harnessed to maximise social value and deliver greater social, economic and environmental justice.
This requires action on a number of fronts:
A more enlightened approach to commissioning and procurement
The application of social value should be much broader and deeper, with the question of how social, economic and environmental benefits could be maximised addressed right upfront commissioning processes. Crucially, this should provoke questions around whether some services should even be outsourced. And whilst we recognise that the current system cannot just be changed overnight, removing extractive providers from public sector supply chains should be what the public sector everywhere is working towards.
The public sector spends billions every year, on everything from goods such as stationery and medicine, through to the construction of schools and roads. The Public Services (Social Value) Act 2012 has been weak here when it comes to delivering greater social value as part of public sector expenditure and we therefore need effective legislation to guarantee the delivery of social value where there is a need to go out to the market to purchase goods as well as some services. The introduction of mandatory social licensing would mean that providers can only enter particular markets if they have changed their business practices and guaranteed the provision of social benefits to communities and stakeholders.
Harnessing current available practice
In lieu of a social license to operate, pre-qualification should be used more extensively to control access to public sector markets. Furthermore, since the onset of Covid-19, the government has issued a series of procurement notices, which allow contracting authorities – including local authorities, NHS bodies and the wider public sector – to take extraordinary measures, such as the continuation of payment, even when firms are no longer doing contracted work. These measures should be used where possible to support the local economy and local businesses.
As we move toward a stimulus programme, we must ensure that every pound of spend flows through our local economies, supporting business, carbon and pollution targets, enterprise and jobs. In this we must – at the very least – ensure social value is rigorously applied. At best we need new forms of social licence, that turn a trickle of social value benefits into a torrent.