Public Procurement and the Civil Society Strategy - Motion to Take Note

Part of the debate – in the House of Lords at 3:00 pm on 23rd May 2019.

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Photo of Lord Wallace of Saltaire Lord Wallace of Saltaire Liberal Democrat 3:00 pm, 23rd May 2019

My Lords, if I may return the compliment to the noble Lord, Lord Maude, I learned a lot while working with him. One thing I particularly learned was how difficult it is to work across Whitehall. The entrenched traditions of departments—not only Permanent Secretaries but also Secretaries of State—make it very difficult to innovate or provide new means of dealing with digital, waste disposal or whatever it may be. I regret that some of the initiatives which we—the noble Lord, Lord Maude, in particular—took in government were not entirely successful because they ran into these structural difficulties.

I want to focus my speech on three things. First, unless we have a much stronger emphasis on local commissioning and much less on central commissioning, we will not achieve the sort of social value we are talking about. Secondly, part of our problem is that the focus on value for money makes it very difficult to bring social value back in. Thirdly—I pick up the theme of the noble Lord, Lord Maude—we have to rediscover the importance of the public service ethos as a motivation in outsourcing and in dealing with, in particular, the non-profit sector. That is part of the reason why we need to strengthen the non- profit sector.

The final chapter of the Civil Society Strategy recognises the structural problems of the model of outsourcing which successive Governments—Labour, coalition and now Conservative—have developed over the last 20 to 30 years:

“The reforms have led to a greater focus on outcomes and costs. However, they have also spurred the development of a transactional model of service delivery, with an often rigid focus on quantifiable costs, volumes, and timescales rather than on the relationships, flexibility, and patience which the reality of life for many people and communities demands”.

I spoke to a number of officials while preparing this speech, and many of them said that it is all very well to try to put in social value, but when you are arguing with the Treasury, value for money, which you can quantify, wins the day. The problems with quantifying social value are very considerable. There is an important distinction between public value—social value is part of that—and private value and between public motivation and private motivation. We all recognise that timescales of public investment are longer than the usual timescales for private investment.

I disagree with the noble Baroness, Lady Finn, that externalities are a matter for the private sector. The externalities that the DWP imposes on the National Health Service by some of the ways it treats universal credit benefit recipients are very clear. The externalities that the for-profit care sector imposes on the NHS by the way in which it does not provide sufficient health support for its members are also extremely clear. There is a range of ways in which the interconnectedness of particular contracts is not recognised in our current outsourcing, as we have seen with probation and in the extent to which cuts to youth services lead to more school exclusions and higher youth crime. The motivation for workers in the public sector are clearly not accepted as relevant in the economics of public choice theory which drives much of the value-for-money analysis which we still have. This is an issue I began to argue about with economists at the LSE when I was a teacher there. I used to be quite critical of the sort of economics taught in the next-door department when teaching my students.

The Young review of the social value Act in 2015—by a Lord Young with no particular connection with Cookham, so far as I am aware—said:

“the incorporation of social value in actual procurements appears to be relatively low”,

after three years of operation. It also said:

“the current state of social value measurement can make it difficult for public bodies to differentiate the additional social value offered by one bidder over another”.

Many commissioners used it as another way of defining value for money or negotiating down the cost of contracts.

The opening statement of the Social Value in Government Procurement consultation paper promises that:

“Central government will, in future, take better account of social benefits in the award of its contracts”.

That was several years after the 2012 Act had come in. The paper quotes David Lidington, who has said:

“We want to see public services delivered with values at their heart”.

That was what the Act six years earlier was beginning to talk about.

What we all should be concerned with is how to strike the right balance between traditional Labour municipalism, which assumed that only trained and paid professionals employed by the state could be trusted to work at the interface between the state and civil society, and libertarian Conservatives who want to shrink the state and leave most social welfare to volunteers and charities. A fundamental part of my party’s priorities is that far too much public spending in England is controlled by central government rather than by local government and that attempts at devolution in England have so far been limited, hesitant and undermined by continuing cuts in financial resources for local authorities.

I waded through the Civil Society Strategy White Paper. My strongest criticism is that there is no recognition of the negative impact of continuing cuts in local authority budgets or of the importance of accountable local government in linking citizens, civil society and government. In 120 pages there are two paragraphs on democratic government. One admits:

“Many people feel disenfranchised and disempowered, and the government is keen to find new ways to give people back a sense of control over their communities’ future”.

There is no mention of greater financial autonomy and revenue-raising powers. We are offered only citizen’s juries and “trusted local messengers” who will not, I assume, be locally elected councillors. The 300-word section on the role of local government states that,

“local authorities continue to play an active role in communities”.

It is very kind of the central government to allow them to do so. I was left with the suspicion that some of the enthusiasm for volunteers comes from the hope that unpaid people will do the work previously done by professionals whose jobs have been axed. There are examples of volunteers in the police force and in teaching English as a foreign language now that cuts have been made in paid people.

Much of the Civil Society Strategy is Newspeak of the sort that the Daily Mail and the Telegraph would ridicule if it came from a non-Conservative Government. We are told about the #iwill fund, the enabling social action programme, the good help programme, the good work plan, the Purposely tool—I like that one particularly—to enable,

“social entrepreneurs to embed purpose into their business’s DNA”,

the inclusive economy unit, the business against slavery forum, the Government’s democratic engagement plan, their innovation in democracy programme and even a body called OSCA that describes itself as a social impact lab. I am sure the Minister can explain to me precisely what a social impact lab does.

We are told:

“The public funding of … youth services has always been the responsibility of local authorities ... despite the pressures on public sector finances”,

and that the Government will,

“review … the statutory duty on local authorities to provide … youth services”,

with some suggestions that charities or the Big Lottery Fund might usefully fund them instead. The Big Lottery Fund appears a good deal as a source of funding, together with the dormant accounts scheme, which seems to have been spent three times during the course of 120 pages.

On education, the strategy states:

“we are pleased to support the commitment made by the Careers and Enterprise Company to create a toolkit to help embed social action as part of a young person’s career pathway”.

There is no mention of the rising number of school exclusions as cutting across any social integration or engagement for many deprived children, or of the impact of cuts in school funding on broader parts of education. The strategy was published several months after the publication of the report of the Lords Select Committee on Citizenship and Civic Engagement, which bluntly stated:

“The Government has allowed citizenship education in England to degrade to a parlous state. The decline of the subject must be addressed in its totality as a matter of urgency”.

Again, the Civil Society Strategy is dreaming of an alternative world in which such topics are already available, which very clearly they are not.

There is a direct contradiction between calling for greater local community involvement and taking schools—one of the core elements of local communities —out of local control by forcing them into multi-academy trusts, sometimes run by overpaid executives a good distance away from such communities. I should perhaps say to the noble Baroness, Lady Finn, that the ministerial foreword tells us:

“Businesses are rediscovering the original purpose of the corporation: to deliver value to society, not just quarterly returns to shareholders”.

Wonderful stuff—no evidence whatever is provided. The 2017 paper People Power: Findings from the Commission on the Future of Localism was far more persuasive on the broad approach needed to empower people within communities and to link different public services together, but the government paper on democratic engagement Every Voice Matters, which I also read in preparing for this debate, is even more vacuous than the Civil Society Strategy.

Several of those whom I have consulted in preparing this speech have told me that local government is much better than central government at understanding the concept of social value. I recall seven years ago being taken round one of the largest estates in Leeds by the head of the neighbourhood police team, who worked closely with local churches and voluntary groups, as well as with other services in Leeds. Now, of course, police cuts have forced the disbandment of most such teams, with the loss of most police community support officers. When I was taken round a similar estate in Bradford last year by our local council leader, we saw no sign of any police presence or of any other representatives of local or central government: no government support for a depressed, left-behind, politically alienated community, 40% of whose housing has been sold off, with much of it now being in the hands of private landlords without a stake or interest in the local community.

We need to empower local authorities and the non-profit sector much more than we have managed to achieve. Again looking at Bradford, I see that our social housing association is training apprentices and is specifically recruiting women and people from disadvantaged areas. Last year, it had several hundred applications for 10 new places. That shows that the demand is there but others are not required to do it.

I could go on, although I shall not, but I wish to propose that we have to deal with reinstating the concept of public value more than private value. We have to get the Treasury’s concern with value for money defined in conventional economic terms. We have to revive the concept of local accountable government with adequate funds to provide and co-ordinate local services. I suggest that, given that the current situation we are in has evolved over a succession of Governments, we need to rethink a cross-party approach to redefining some of these fundamental issues concerning the way in which the state, the third sector, the citizen and private enterprise interact in providing such an important part of our national community.