Tackling poverty through public procurement
Richard Macfarlane, with Anthony Collins Solicitors (2014)
Joseph Rowntree Foundation
The rise in interest in social procurement is international. In the financially austere environment facing the UK there is a need to find new ways of creating employment for the most marginalised. The Joseph Rowntree Foundation undertook research to understand the role of public procurement in creating employment opportunities for those that are currently outside of the labour market and living in poverty.
The research found that the UK has a supportive legislative environment. The Social Value Act (2012) enables buyers to seek ‘additionality’ to capture the role of procurement in creating social value beyond the goods and services required. This is supported by the UK governments sustainable development framework requires all departments to report on economic prosperity, including median income; long-term unemployment; and poverty. Public procurement cannot contribute to all of these elements, but through the targeting of job and training opportunities that arise from public procurement government can increase opportunities for the most socially disadvantaged. Social procurement is growing in appeal in the UK but simply having policy has not resulted in widespread adoption.
Measurement of the impact for social procurement is problematic; approaches such as SROI and LM3 would be useful in making the case for social procurement but are impractical in terms of data collection for procurement teams. Value Wales has developed a Community Benefits Tool which has to be completed for contracts valued at £2 million or above. This collects output data for ten sustainable development measures from clients and contractors/suppliers, and uses a local multiplier to measure the impact on the economy of Wales. How well the data is verified depends upon the contract management team.
Perhaps the most important and transferable lesson is that the best outcomes will be achieved where the principles of good procurement are applied to social benefit requirements, including adopting a clear and ideally measurable social specification; bidders who are able to deliver; give weight to the social /community benefit requirements in the award process; and enforce the contract requirements. Good process results in good outcomes.
Based on a range of case studies the research proposes a model for procurement be adopted nationally based on the Birmingham City Council experience whereby 60 person-weeks of paid employment is provided for a new entrant trainee per £1 million in invoiced contract value. If the $150 billion public procurement spend in Australia created 1 job for every $2,000,000 of spend this would create 75,000 jobs for long term unemployed Australians (there are currently 83,000 long term unemployed Australians. To support this sort of target there is also a need for cross government targets so that the likes of infrastructure and transport are equally obligated to deliver social outcomes as housing departments and disability, who tend to be more predisposed as their clients will often be the beneficiary of social procurement.