Social Value Act, social benefit clauses & SRO at CLG Committee Inquiry on procurement

And so to the fifth evidence session of the CLG Committee Inquiry into procurement. The first panel representing the Centre for Local Economic Strategies, National Council for Voluntary Organisations, and The Joseph Rowntree Foundation - all organisations which have previously helped move the procurement improvement debate forward.

To set the witnesses off to a good start and feel relaxed, the Chair started with one of those classic sextuple questions witnesses must, by now, be starting to expect:

One of the things we will be looking at is how procurement might be used for a number of objectives. We will begin by looking at how it might be used by local councils to tackle social disadvantage and poverty. Do you think councils are actually doing this effectively? Are they getting it right, or is there more they could be doing? Who would like to start?

Would anyone seriously have expected the witnesses to answer: "Actually, I think councils are really doing the absolute maximum that could be done". 

That reply wasn't heard but instead we heard that making an impact was down to the culture of officers and how procurement and economic development work together. I agree that there needs to be effective linkage between economic development and procurement but there's a flaw in the answers as they suggest officer driven policy and strategy and made no reference to political leadership. To me, in local government, elected members need to drive and lead the initiative - it is elected members who have to decide on competing priorities and then officers implement and are performance managed. If officers lead, to me, there is a high risk that their own personal agenda are pursued contrary to those of the democratically accountable leadership.

Now, let's reflect on that a bit further, three witnesses and not one of them initially mentions political leadership, yet, in the follow-up question, when political leadership is mentioned by the questioner, surprise, surprise, suddenly: "Political leadership is key, because it tells officers this is a high priority on the long agenda of things they have to deal with..." - call me a cynic, but had the questioner not mentioned political leadership would that key ingredient have been identified?


Nevertheless, if you break down the sextuple question asked, I wonder how the Committee will draw their conclusions from the evidence heard.

One of the witnesses stated that the LGA produced guidance on targeted recruitment and training on social value three or four years ago, and that the concept had been around since 1981. To me this was a very important observation and should have been followed-up to explore lessons learnt and impact - sadly that didn't happen and the opportunity was lost.

We learnt that Birmingham, Liverpool and Nottingham have political leadership saying: "“This is something we have to take forward and are going to take forward”. The officers then get their ducks in line and start to work out how to do it and where to do it and so forth." Now read that carefully, it does not say or provide evidence of what Birmingham, Liverpool and Nottingham have implemented.

The witnesses were asked "To what extent are local councils exploiting the Public Services (Social Value) Act 2012 in terms of encouraging social benefits to their communities?" - perhaps it's because I'm reading an uncorrected proof, but what is meant by "encouraging social benefits to their communities"? I have to say I just don't understand the question.

The Committee could be forgiven for believing they heard the witnesses say councils are using procurement to address disadvantages and poverty. However, NCVO then said: "the feeling we get from [NCVO]members is that there is still a tendency to focus on the lowest price in procurement exercises and not look at the wider social and environment wellbeing indicators". If that anecdotal evidence is correct, it is irreconcilable with making any meaningful strategic contribution, even cost reduction, it is merely saying the market decides and procurement is managing an administrative process - that contradiction was not probed. Nor was that contradiction probed when the three witnesses started to trade boasts (sorry, examples) of how they had experience working with councils in delivering, what I consider, exemplary procurement. Excellent examples were cited of Manchester City, York City, and Birmingham City yet, if the councils buy on 'lowest price', how can that evidence be reconciled? 

But there is a another issue here and that is about ensuring that everyone is talking about the same thing. My reading of part of the discussion is that it was on the specifics of the Public Services (Social Value) Act 2012  and whether councils are 'exploiting' the Act. The Act requires consideration of impact; 'consideration' does not necessarily lead to action and is not the same as embedding social benefit clauses in contracts or SROI, yet that is where the discussion went. The Committee need to be careful of muddling the Social Value Act, social benefit clauses and SROI - they could all be linked but not necessarily. I see the three as part of a journey but not the only route - councils should consider the way in which social value could be delivered (The Act), one option they could choose could be to include social benefit clauses, but there are others, finally they can measure the impact by SROI. Bizarrely, we witness politicians being caught by a ploy of which they are often criticised for themselves, namely, ignoring the question and giving an answer to a different question which they wish they had have been asked. So rather than 'exploiting' the Social Value Act, the Committee heard about the absence of a standard approach to SROI (which isn't a million miles away from what the witness peddles, even though such a potential conflict of interest wasn't declared). 

I have frequently cautioned about the assertions of 'perceived experts', and, yet again, we found the Committee asking witnesses to stray outside their actual field of expertise - the Committee were actually  hearing from, what I am sure were well intentioned witnesses, very complicated interpretations of the public procurement legislation, views on the training of council legal advisers and the training of procurement officers. No one appeared to ask 'how could these witnesses actually know?'

However, when probed about issues which the witnesses did have expert knowledge some very valuable evidence was gained, specifically, we heard that, on average, 31% of local government spend goes on local businesses. To me that was a very important piece of evidence which appeared to have justification, yet it appears to be significantly lower than the assertions made by witnesses at earlier evidence sessions. The Committee need to make sure that apparent contradiction is further probed.

It always pleases me when I come across a 'reason to be cheerful' and this evidence session yielded a particular piece of joy when we heard: "My experience now, compared to 30 years ago, is that procurement officers are open to [social value], but they do not know how to do it".  Does it make any sense to compare procurement now with 30 years ago - wasn't that 1983? Wasn't that before even Thatcher's 1984 landmark report on Government Purchasing, before 'lean thinking', before IPS was CIPS,  before the internet, and before we even used procurement in the context of a reputable profession!  No, what we needed was a comparison of how procurement compares today since the launch of the Compact and the National Procurement Strategy - that's what we need to learn from but haven't.

The Committee asked a question which did start to stray in the direction of learning from that past  though when they asked: "Are you referring to a point of reference to which procurement officers who are not quite certain whether they are doing things in the right way, or who want to innovate and are not quite clear on the boundaries, could go for particular advice and that sort of thing? The witness answered "If there were ways that people could exchange good practice in a more informal way, it would certainly help, yes. If there were a way that could be through trusted networks of others who have been through the same sorts of issues, yes, that would help".  This is an area the Committee really need to probe: did local government not have those procurement resources? The Committee needs to ask: "What was the impact of the demise of OGC, RIEPs, IDeA, NePP, and the Efficiency Exchange?". 

The other observation I would make was that the witnesses seemed to place a lot of emphasis on measuring social impact but failed to shine the spotlight on contract management - is it not the role of contract management to ensure that social objectives agreed within a contract are delivered as opposed to promised?

Set aside what may appear to be cynicism, but I felt the witnesses made a useful contribution but where they strayed from their area of expertise that evidence needs to be tested for robustness, and where it can't be validated, treated with extreme caution. The Committee also need to reflect on their own strategy, asking leading questions and many faceted questions isn't really getting to the truth.