Monthly Archives: April 2014

Tackling Poverty Through Public Procurement – details for practitioners

My previous post commented on the launch by the Joseph Rowntree Foundation (JRF) of their report on Tackling Poverty Through Public Procurement. That post looked at the policy implications of the report, and this post follows on with a discussion about the practicalities. The audience here is assumed to know the usual workings of public procurement in the UK. For those who don’t and are interested to know more, a useful free starting point is https://www.gov.uk/tendering-for-public-sector-contracts/the-procurement-process .

The key lesson from this JRF report is that it is possible to operate a public procurement call for bids where the successful contractor will have to work with a named list of local agencies in order to provide additional local impacts, including employment and training for people in the most disadvantaged areas and groups. To be lawful, this requirement must be advertised right at the start, such as in the Official Journal of the European Union (OJEU). This must be quantified, for example following the JRF target of 52 person-weeks of employment for the most disadvantaged residents for each £1 million of contract value.

This approach is compliant with the MEAT (most economically advantageous tender) criteria for scoring bids which by law can include environmental and social criteria as well as economic ones. All criteria used must be relevant to the nature of the contract and to the wider work of the purchasing client. One of the most powerful reasons for local employment and training is that any improvements in disadvantaged areas and groups will improve the value for money obtained by the wider public sector in lower costs to a range of departments and services, for example in lower requirements for out-of-work benefits.

It was noted at the launch event that these additional criteria are actually most frequently applied in the procurement of major construction projects, which is all well and good, but they now need to be taken further into contracts for services and supplies. These non-construction procurements actually are a much bigger slice of the cake.

Some of the typical concerns raised by some procurement practitioners are as follows:

1. Will it cost more?
No, the firms which are good at recruiting disadvantaged people are also good at their work generally, including cost control. The local benefit criteria is typically around 5% of the total score, so winning companies will also be very good at the other 95%.

2. Will it be a make-work scheme?
No, because successful firms want all of their staff to be as productive as possible so they will develop any previously-disadvantaged staff along with the rest of the workforce.

3. Will EU rules allow it?
Yes, and the details are in the JRF report. This applies both to the law about free mobility of labour and the law about firms in all EU countries being able to bid equally. It is equal because the local agencies will work with whoever wins the bid, wherever their head office is. And the local agencies will not discriminate against disadvantaged residents based on their nationality, directly or indirectly.

An interesting example of this work in practice was described at the launch event. Birmingham City Council has co-located a local employment officer within Network Rail in connection with the redevelopment of New Street rail station. As one result, 10 unemployed apprentices were recruited by a local demolition sub-contractor.

The presentation by Birmingham City Council outlined the following factors to ensure success:

– Make it policy.
– Get buy-in from partners, including the private sector.
– Embed the details within contracts
– Support businesses and train public sector procurement staff
– Agree the key performance indicators, otherwise it will drift into easy-to-do areas and groups
– Monitor the data, and use RAG ratings (red, amber, green) to trigger payments
– Celebrate successes
– Make it business as usual.

As one speaker said, you have to “bake in” the targets into the contracts, but don’t jump all over contractors or sub-contractors if they get a red RAG rating, but instead support them to find solutions. And, they added, it is better to give the opportunity to 10 people to change their lives than to list 100 people moving from one work programme to another.

A phrase that was used repeatedly at the launch event was that public procurement staff needed to know that they had permission to impact in the most disadvantaged areas and groups. Finally, within the presentations it was noted that in Birmingham the director of public health is now looking to copy the council’s approach into their own contracts, such as mental health support services.

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Tackling Poverty Through Public Procurement

Today (28 April) saw the government’s launch requiring long-term unemployed people to sign on every day. Two bridges along the river from Parliament, today also saw the launch by the Joseph Rowntree Foundation (JRF) of their report on Tackling Poverty Through Public Procurement. In my view the JRF report may ultimately have a bigger impact on reducing poverty and changing lives. I would say that JRF is upstream of parliament certainly geographically but also in terms of policy.

In a nutshell, Richard Macfarlane explained how the report shows that is perfectly lawful for public bodies to specify a list of local agencies that must be worked with, whichever company wins the contract and wherever they come from in the EU or beyond. Equally the local agencies must re-affirm that will work with anyone who meets the criteria for being disadvantaged within their catchment area, regardless of their EU (or even non-EU) nationality.

A case study from Birmingham then looked at how the council has managed to include local employment clauses into major procurements with a programme of £7.9 billion and a pipeline of £0.9 billion of further work. The deal is that 60 person-weeks of employment or training is procured for every million pounds within any major contract. The council has tracked the impact of their work on the most disadvantaged localities and have seen significant reductions. Impressively, 17 homeless people in Birmingham are now in full-time employment because of better procurement. Lives have been changed.

The JRF launch was chaired by Chris White MP, the author of the Social Value Act 2012 and the vice-chair of the all-party group on poverty. The speakers were the authors of the report (Richard Macfarlane and Mark Cook), from Birmingham City Council (Shilpi Akbar, Assistant Director for Employment) and Carillion (Simon Dingle, Operations Director) with a case study in using procurement for stronger local impact. The JRF lead is with John Low, and the lead started out twelve years ago with Peter Marcus, now at Zenith Chambers. The first report in 2002 was called, Achieving Community Benefits Through Contracting.

So you might well ask, if it is plainly lawful and such an obviously good idea, what is the problem? Well, guess what — the governments of Wales and Scotland, and many English local authorities are on board, but bits of Whitehall remain stuck in the mud. Various suggestions were made at the launch event as to what to do with Whitehall. Perhaps some departments and agencies genuinely struggle to understand the ‘place impact’ of their procurement? They need help. Perhaps ministers are fearful of any new guidance or permission to civil servants looking like a new regulation, given the ‘one in, two out’ mandate to reduce regulation? They need reassurance.

This could well be a topic where local authorities involved in City Deal discussions with Whitehall take a lead, ideally in true partnership, but with muscular and co-ordinated persuasion if necessary. There may also be a role for the Core Cities and the Eurocities networks here.

JRF announced their plan to convene a network of interested organisations to take this agenda forward, to meet with politicians and with civil servants where possible, and to hold regional events. For my money, getting the Treasury Solicitors on board with explanatory guidance to colleagues would be a great impetus.

ERDF and Local Strategies

The general feedback being given to LEPs on their draft Local Strategies is that many of these have been too similar and generic, too much ‘of a type’. To some extent this is understandable. ERDF itself is quite prescriptive in terms of what is eligible for funding, so a local strategy that, say, focused on improving bus routes would not get very far at all.

Also, the strong focus for ERDF in 2014-2020 on SMEs, low carbon, and innovation sets down some new constraints. In my view this is good, in that it challenges areas of high unemployment not just to keep running the ‘same old’ projects, sometimes even for the ‘same old’ beneficiaries.

So, it seems too many of the local strategies have started out with some local statistics but then go on to suggest generic, boilerplate solutions.

CLES have usefully analysed and commented on a range of LEP strategies, and especially on the worrying degree to which there is a lack of social inclusion so far in quite a few of the strategies. As they comment, some strategies are purely economic and take the approach that ‘a rising tide will lift all boats’. Well, we know too well that some boats all too often get left behind, stuck and forgotten.

The Leader of Manchester City Council, in his last blog before the purdah of local elections, makes the point that the persistently high levels of unemployment in disadvantaged communities still needs more effort and solutions, especially for those people who are furthest from the labour market.

And in my view this points to a weakness in a lot of local strategies. It is very easy to focus on employment sites, rather than on communities. So, for example, a new supermarket is about to open, so there is joint working to ensure that as many jobs as possible go to local residents. Which is well and good, and we all pretty much know how to do this by now. We also know in our bones that, too often, many of the new quality jobs will miss local residents completely and get taken by commuters from, bluntly, the posher areas. Is there another way?

What is so much harder to do is to start with community X. Very few strategies actually know the details of the jobs that people already have in community X. Nearly all employment analysis we do is based either on very large travel-to-work or conurbation areas or is based on the workplace itself. The best source of community-based employment data is probably held by HMRC, which at the moment is mostly forbidden by law from sharing their data – even with other departments within government. HMRC consulted last year on how they might better share data, of course with strong ethical and privacy safeguards. That consultation gave a flavour of HMRC’s deep frustration with an example where they could not share data with the health authorities in Wales even though that could have reduced the number of winter deaths of elderly people.

HMRC data will be able to say, for any postcode, ward, output area, etc, — how many people who live here are working, where, doing what, for how long, and for how much. And it will only be by digging into this type of very local community-specific data that we can start to design and support those projects, interventions, which will make a difference.

However, we cannot wait for a change in the legal powers of HMRC, so we need to devise other cost-effective ways to collect rich knowledge on employment at the community level.

I think we are in for a few surprises. I hope so. I would love to find out that, for example, in Beswick or wherever there is a strong skills set in model making and repairing. Maybe this is clustered around a club of retired steelworks engineers who, along with an interested technology teacher, have passed on the skills and contacts to a new generation, who are now using the internet and post office to supply enthusiasts overseas.

And what they don’t need most from ERDF is a job trial at the local supermarket.

Was there more funding for the voluntary sector during the 1980s than today?

NCVO, the National Council for Voluntary Organisations, has published figures which show that the voluntary sector has lost £1.3 billion in funding from the government in the last year (link below). The gap was filled by a rise in private donations from individual people.

NCVO’s figures of income for the third sector started being collected in 2000/01, and this year just finished is the first since then where the income from government grants and contracts has fallen.

I wonder how these figures would compare with the 1980s? In 1988 the Commission for Racial Equality commissioned GMCVS to produce a paperback guide on funding for BME groups. It was my pleasure to write that book. Below is a link to a PDF copy.

OK, it was qualitative not quantitative – the book listed all the sources, not the amounts available. But it listed a wide range of central and local government sources of funding, including government agencies such as the Equal Opportunities Commission, the Manpower Services Commission, the various urban Task Forces, the strands of the Urban Programme, and many more.

So I personally would not be surprised to be told that, in real terms, there was more funding for the voluntary sector from all government sources in 1988 when compared with 2014. Have a look for yourself.

BOOK: FUNDING – a handbook for ethnic minority groups in North West England – 1988 – ISBN 0-9513921-0-7

News item: NCVO: http://www.thirdsector.co.uk/go/news/article/1288858/latest-uk-civil-society-almanac-shows-voluntary-sector-shrinking/

New Economics – alternative models to crash, boom and bust.

Crash, Boom and Bust may sound like a punk band that never quite made the big time. But in economics, unfortunately, they are still on a world tour.

I’ve blogged before on the new ideas in economic theories, and the efforts of students at the University of Manchester to get official recognition for these new approaches by having these ideas taught as optional modules on their course. As The Guardian newspaper reports today (link below) one year on, these new ideas are still facing some academic resistance.

The classic example is that road accidents are economically “good things”. More work for car repair garages. More work for doctors and nurses. More work for the police. Everyone is a winner, according to traditional economists. Except the people who were in the car, cycling or crossing the road, but their awful experience literally doesn’t count, because it puts no new money in the till.

And therefore new economics also looks at and counts factors such as environmental degradation, inequalities, development, fair trade, fuel poverty, food banks, and the value of nurturing and caring.

So well done to these students for persevering with trying to broaden a course, hopefully one day preparing the next generation of economists to be able to do more than just get jobs running last year’s Excel spreadsheets for a merchant bank.

Link: http://www.theguardian.com/commentisfree/2014/apr/07/uk-universities-alternative-economics-models-post-crash-society